A new office building was constructed 5 years ago by a consulting engineeringfirm. At that time the firm obtained the bank loan for P 10,000 with a nominalrate of 25% compounded quarterly. The terms of the loan called for equalquarterly payments for a 10-year period with the right of prepayment at any timewithout penalty. What is the balance due on the original mortgage (principal) if allpayments have been made through full five years?P 7507.31P 7707.40P 7803.11P 7612.41

Amortization Payment: Amortization payment refers to the payment made by the borrower to the lender…

Answered: without penalty. What is the balance…

without penalty. What is the balance due on the original mortgage (principal) if all payments have been made through full five years?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 1EA: Halep Inc. borrowed $30,000 from Davis Bank and signed a 4-year note payable stating the interest...

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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

A new office building was constructed 5 years ago by a consulting engineering
firm. At that time the firm obtained the bank loan for P 10,000 with a nominal
rate of 25% compounded quarterly. The terms of the loan called for equal
quarterly payments for a 10-year period with the right of prepayment at any time
without penalty. What is the balance due on the original mortgage (principal) if all
payments have been made through full five years?
P 7507.31
P 7707.40
P 7803.11
P 7612.41

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