Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. ??(loan amortization)??on december? 31, beth klemk

??(Loan amortization)??On December? 31, Beth Klemkosky bought a yacht for ?$100,000. She paid ?$20,000 down and...

Free

60.1K

Verified Solution

Question

Finance

??(Loan amortization)??On December? 31, Beth Klemkosky bought ayacht for ?$100,000. She paid ?$20,000 down and agreed to pay thebalance in 14 equal annual installments that include both theprincipal and 15 percent interest on the declining balance.

How big will the annual payments? be?

On December? 31, Beth Klemkosky bought a yacht for ?$100,000 andpaid ?$20,000 ?down, how much does she need to borrow to purchasethe? yacht?

Answer & Explanation Solved by verified expert
3.7 Ratings (725 Votes)

amount borrowed = price - down = 100000-20000=80000

Annual rate(M)= yearly rate/12= 15.00% Annual payment= 13975.08
Year Beginning balance (A) Annual payment Interest = M*A Principal paid Ending balance
1 80000.00 13975.08 12000.00 1975.08 78024.92
2 78024.92 13975.08 11703.74 2271.34 75753.58
3 75753.58 13975.08 11363.04 2612.04 73141.54
4 73141.54 13975.08 10971.23 3003.85 70137.69
5 70137.69 13975.08 10520.65 3454.43 66683.26
6 66683.26 13975.08 10002.49 3972.59 62710.67
7 62710.67 13975.08 9406.60 4568.48 58142.20
8 58142.20 13975.08 8721.33 5253.75 52888.45
9 52888.45 13975.08 7933.27 6041.81 46846.63
10 46846.63 13975.08 7026.99 6948.08 39898.55
11 39898.55 13975.08 5984.78 7990.30 31908.25
12 31908.25 13975.08 4786.24 9188.84 22719.41
13 22719.41 13975.08 3407.91 10567.17 12152.24
14 12152.24 13975.08 1822.84 12152.24 0.00
Where
Interest paid = Beginning balance * Annual interest rate
Principal = Annual payment – interest paid
Ending balance = beginning balance – principal paid
Beginning balance = previous Year ending balance

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

??(Loan amortization)??On December? 31, Beth Klemkosky bought ayacht for ?$100,000. She paid ?$20,000 down and agreed to pay thebalance in 14 equal annual installments that include both theprincipal and 15 percent interest on the declining balance.How big will the annual payments? be?On December? 31, Beth Klemkosky bought a yacht for ?$100,000 andpaid ?$20,000 ?down, how much does she need to borrow to purchasethe? yacht?

Other questions asked by students

Q

Internal Audit Question 1 The following information is extracted from a draft of an audit report prepared upon...

Accounting
Q

A small block of mass m is placed on a platform that has a rectangular...

Physics
Q

In a survey, 30 people were asked how much they spent on their child's last...

Basic Math
Q

Calculate 5 5x dx dx given the following 8 4 5 61 Sxdx 4 5...

Calculus
Q

Write the linear inequality for this graph 10 9 8 7 6 53 10 9...

Algebra
Q

Cairns owns 75 percent of the voting stock of Hamilton, Inc....

Accounting
Q

Doran, a single individual, received $20,000 in social security benefits in 2017. Dorans 2017 modified...

Accounting
Q

repare journal entries to record the transactions for the year. (If no entry is required...

Accounting
Q

TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are...

Accounting
Q

Harris Company's fixed overhead costs are $4 per unit, and its variable overhead costs are...

Accounting
Q

Required: -1. Calculate the loan proceeds made available to Powell. Answer is...

Accounting
Q

A company is projected to have a free cash flow of $346 million next year,...

Finance