Chock My Workremaining) Cick here to read the efook: Amortired Loans LOAN AMORTI

Question

Chock My Workremaining) Cick here to read the efook: Amortired Loans LOAN AMORTIZATION an sold her house on December 31 and took a $45,000 mortonge as part of the payment. The 10-year mortoage has a 9% nominal interest rate, but t cals for semiannusl payments beginsing est une 30 Next year an must: report on Schedule 8 of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year s Whet is the delar amount of each payment Jan rcvesond your answer to the nea b. How much interest was included in the first paymet? Round your anwer to the nerest cen now muth repayment of princieal was schde Round your anewer to the ewrest cent How de these values change for the second pment L The portion of the peyment at is ceted to interest decines,whie the portson of the peyment tat is apelied to principal increses IL. The portion of the payment tat is polied to interest increases, while the portion of the payment that is acplied to principal deoesses l. The portion of the peyment that is elied to interest and the portin of the payment that is appled to princoel remains the same theoughout the life of the oan . The pertion of the peyment tat is spolied to interest decies, whle the porion of the payment at is aped te principel alse decines V. The portion of the payme at is applied to interest increases, whle the pertion of the payment that is apolied to principel also eases wil her interest ineome be the same nest year t. If the payments are conian, why dses the smount of interest income change oer me L As the loan is amortieed (paid off, the begiening balance,ecee interest chargn, increases and the repayment of inipal inceases 3. As the loan is amoreized (paid om, ne begiening balance, hence the interest charge, declines and the repayment of principal incresses IIEL. As the loen is amortized (paid offn, the begiening belance, hence the iterest charge, declines and the repayment of principal decines ry. As te oes as amort red (paid ), ??? begning baiance, hence the ineerest charge, increases and the repayment of grnegal dedMs. V. As the loan is amptined (peid om), tne begening belance decines, but the interest charge nd the repeyment of principal nemain the same Check My Woek(s remaining)

Explanation / Answer

PV $45,000 NPER 20 (10 x 2) Rate 4.50% (9%/2) EMI $3,459.43 =PMT(4.5%,20,-45000) Part a Jan receives $3459.43 as equal payment Part b Interest in first payment (45000 x 4.5%) = $2025 Repayment of principal in first (3459.43-2025) = $1434.43 I The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal increases. Part c Interest on second payment (45000-1434.43) x 4.5% = 1960.45 Total interest for first year (1960.45+2025) = $3985.45 Her interest income will decline in each successive year. Part d II As the loan is amortized (Paid Off) , the beginning balance , hence the interest charge, declines and the repayment of principal increases.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.