a. The time needed to pay off the loan with payments of $23,000.00 is _____ years. (Round up to the nearest year.) b. The total amount of the payments is $______ (Round to the nearest cent as needed.) c. The amount of interest saved is $______. (Round to the nearest cent as needed.)

a. The time needed to pay off the loan with payments of $23,000.00 is _ years. (Round up to the nearest year.) b. The total amount of the payments is $ (Round to the nearest cent as needed.) c. The amount of interest saved is $____. (Round to the nearest cent as needed.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 17P

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

The payment necessary to amortize a 5.7% loan of $97000 compounded annually, with 5 annual payments is $22,839.84. The total of the payments is $114,199.20 with a total interest payment of $17,199.20. The borrower made larger payments of $23,000.00. Calculate (a) the time needed to pay off the loan, (b) the total amount of the payments, and (c) the amount of interest saved.

a. The time needed to pay off the loan with payments of $23,000.00 is _____ years.

(Round up to the nearest year.)

b. The total amount of the payments is $______

(Round to the nearest cent as needed.)

c. The amount of interest saved is $______.

(Round to the nearest cent as needed.)

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