Answered: $5,000 i = 1% per month Months 1 2 3 4…

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$5,000 i = 1% per month Months 1 2 3 4 5 6 7 2223 24 A = $235.37 Figure 3.11 Cash flow diagram

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 18MCQ

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Question

Suppose you secure a home improvement loan in the amount of $5,000 from a local bank. The loan officer gives you the following loan terms:
• Contract amount = $5,000
• Contract period = 24 months
• Annual percentage rate = 12%
• Monthly installment = $235 .37
Shown is the cash flow diagram for this loan. Construct the loan payment schedule by showing the remaining balance, interest payment, and principal payment at the end of each period over the life of the loan.

$5,000
i = 1% per month
Months
1 2 3 4 5 6 7
2223 24
A = $235.37
Figure 3.11 Cash flow diagram

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