Chapter12: Current Liabilities
Section: Chapter Questions
Problem 16Q: Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual...
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Concept explainers
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Question
As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI (in $), using this table and the monthly PITI (in $) for the mortgage. (Round dollars to the nearest cent.)
Transcribed Image Text:Table 14-1: Monthly Payments to Amortize Principal and Interest per $1,000 Financed
Monthly Payments
(Necessary to amortize a loan of $1,000)
Interest
Rate (%)
5
Years
10
Years
15
20
Years
25
Years
30
Years
35
Years
40
Years
Years
3.50
18.19
9.89
7.15
5.80
5.01
4.49
4.13
3.87
3.75
18.30
10.01
7.27
5.93
5.14
4.63
4.28
4.03
4.00
18.42
10.12
7.40
6.06
5.28
4.77
4.43
4.18
4.25
18.53
10.24
7.52
6.19
5.42
4.92
4.58
4.34
6.33
6.46
5.07
5.22
4.50
18.64
10.36
7.65
5.56
4.73
4.50
4.75
18.76
10.48
7.78
5.70
4.89
4.66
5.00
5.25
18.87
10.61
7.91
6.60
5.85
5.37
5.05
4.82
18.99
10.73
8.04
6.74
5.99
5.52
5.21
4.99
5.50
19.10
10.85
8.17
6.88
6.14
5.68
5.37
5.16
5.75
19.22
10.98
8.30
7.02
6.29
5.84
5.54
5.33
6.00
19.33
11.10
8.44
7.16
6.44
6.00
5.70
5.50
6.25
19.45
11.23
8.57
7.31
6.60
6.16
5.87
5.68
6.50
19.57
11.35
8.71
7.46
6.75
6.32
6.04
5.85
6.49
6.21
6.39
6.75
19.68
11.48
8.85
7.6
6.91
6.03
7.00
19.80
11.61
8.99
7.75
7.07
6.65
6.21
7.25
19.92
11.74
9.13
7.90
8.06
7.23
6.82
6.56
6.40
7.50
20.04
11.87
9.27
7.39
6.99
6.74
6.58
7.75
20.16
12.00
9.41
8.21
7.55
7.16
6.92
6.77
8.00
20.28
12.13
9.56
8.36
7.72
7.34
7.10
6.95
8.25
8.50
20.40
12.27
9.70
8.52
7.88
7.51
7.28
7.14
20.52
12.40
9.85
8.68
8.05
7.69
7.47
7.33
8.75
20.64
12.53
9.99
8.84
8.22
7.87
7.65
7.52
9.00
20.76
12.67
10.14
9.00
8.39
8.05
7.84
7.71
9.25
20.88
12.80
10.29
9.16
8.56
8.23
8.03
7.91
9.50
21.00
12.94
10.44
9.32
8.74
8.41
8.22
8.10
8.30
9.75
21.12
13.08
10.59
9.49
8.91
8.59
8.41
10.00
21.25
13.22
10.75
9.65
9.09
8.78
8.60
8.49
10.25
21.37
13.35
10.90
9.82
9.26
8.96
8.79
8.69
8.98
9.18
10.50
21.49
13.49
11.05
9.98
9.44
9.15
8.89
10.75
21.62
13.63
11.21
10.15
9.62
9.33
9.08
11.00
21.74
13.78
11.37
10.32
9.80
9.52
9.37
9.28
11.25
21.87
13.92
11.52
10.49
9.98
9.71
9.56
9.48
11.50
21.99
14.06
11.68
10.66
10.16
9.90
9.76
9.68
11.75
22.12
14.20
11.84
10.84
10.35
10.09
9.96
9.88
12.00
22.24
14.35
12.00
11.01
10.53
10.29
10.16
10.08
10.29
10.49
11.19
12.25
12.50
22.37
14.49
12.16
10.72
10.48
10.35
22.50
14.64
12.33
11.36
10.9
10.67
10.55
12.75
22.63
14.78
12.49
11.54
11.09
10.87
10.75
10.69
13.00
22.75
14.93
12.65
11.72
11.28
11.06
10.95
10.90
Transcribed Image Text:As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI (in $), using this table and the monthly PITI (in $) for the mortgage. (Round dollars to the nearest
cent.)
Term
Annual
Amount
Interest
Monthly
Annual
Monthly
PITI
of Loan
Property
Tax
Financed
Rate
PI
Insurance
(years)
$210,000
7.50%
$6,573
$2,156
$|
25
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