Ms. Ligaya wants to buy her dream car. However, she does not have enough money to pay for ₱5,000,000 full price of the car. She negotiated with the sales agent and paid a down payment of ₱2,000,000 and borrowed ₱3,000,000 from Pure Gold Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Ms. Ligaya will make payments of ₱826,470.14 at the end of each year. How much will be the principal amortization on the 2nd payment? (Provide solution/ explanation)

Ms. Ligaya wants to buy her dream car. However, she does not have enough money to pay for ₱5,000,000 full price of the car. She negotiated with the sales agent and paid a down payment of ₱2,000,000 and borrowed ₱3,000,000 from Pure Gold Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Ms. Ligaya will make payments of ₱826,470.14 at the end of each year. How much will be the principal amortization on the 2nd payment? (Provide solution/ explanation)

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Ms. Ligaya wants to buy her dream car. However, she does not have enough money to pay for ₱5,000,000 full price of the car. She negotiated with the sales agent and paid a down payment of ₱2,000,000 and borrowed ₱3,000,000 from Pure Gold Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Ms. Ligaya will make payments of ₱826,470.14 at the end of each year. How much will be the principal amortization on the 2nd payment? (Provide solution/ explanation)a. ₱706,470 b. ₱724,118 c. ₱734,729 d. ₱754,683
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