Your firm, Bonfre Salt Company, has taken out a bank loan for $2,000,000 at an i

Question

Your firm, Bonfre Salt Company, has taken out a bank loan for $2,000,000 at an interest rate of 6% and a maturity of 2 years. You will make 24 equal monthly payments at the end of each month, thus this is an amortized loan. Create an amortization table for this loan for the first two (2) months. Amortization table: After one-year, at which time Bonfre salt company has made 12 monthly payments and whishes to prepay the loan. Given that there are no pre-payment penalties, what is the remaining balance on the loan (payoff amount)? Remember, Bonfre has just 12 payments remaining.

Explanation / Answer

Yes , Your answer is correct

After 1 year the balance is

Your second answer is incorrect as the balance amount before 12 Payments remaining should be $1029916.32.

You calculated the balance after 13th payment which is wrong as after 13th payment only 11 payments will remain and not 12.

Month Principal(USD) Interest(USD) Balance(USD) 1 78641.22 10000.00 1921358.78 2 79034.43 9606.79 1842324.35

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