Carol Garcia is seeking financing for her new business venture, the development of a local ski hill. She has found two possible sources of financing: (1) a mortgage payable and (2) a note payable. She can borrow $160,000 on January 1, 2027, from either, but the repayment terms differ. Mortgage payable details: $160,000 mortgage with an annual interest rate of 9%. The loan is repayable over 5 years in annual installments of $41,135, principal and interest, due each December 31. The first payment is due December 31, 2027, and the last on December 31, 2031. Long-term note details: $160,000, 5-year note with an annual interest rate of 7%. Annual interest is due each December 31. The principal is due January 1, 2032. (a) Your answer is correct. Indicate the interest expense for the year ending December 31, 2027, assuming Garcia chooses (1) the mortgage payable and (2) the note payable. (b) Interest expense Mortgage payable $ 14400 Long-term note payable $ 11200 eTextbook and Media List of Accounts Your answer is partially correct. Indicate the total cost of borrowing for each option assumed in part (a). Mortgage payable SA $ Cost 14400 Attempts: unlimited

Carol Garcia is seeking financing for her new business venture, the development of a local ski hill. She has found two possible sources of financing: (1) a mortgage payable and (2) a note payable. She can borrow $160,000 on January 1, 2027, from either, but the repayment terms differ. Mortgage payable details: $160,000 mortgage with an annual interest rate of 9%. The loan is repayable over 5 years in annual installments of $41,135, principal and interest, due each December 31. The first payment is due December 31, 2027, and the last on December 31, 2031. Long-term note details: $160,000, 5-year note with an annual interest rate of 7%. Annual interest is due each December 31. The principal is due January 1, 2032. (a) Your answer is correct. Indicate the interest expense for the year ending December 31, 2027, assuming Garcia chooses (1) the mortgage payable and (2) the note payable. (b) Interest expense Mortgage payable $ 14400 Long-term note payable $ 11200 eTextbook and Media List of Accounts Your answer is partially correct. Indicate the total cost of borrowing for each option assumed in part (a). Mortgage payable SA $ Cost 14400 Attempts: unlimited

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 27M

See similar textbooks

Similar questions

Using a financial calculator, solve for the unknowns in each of the following situations. (a) On June 1, 2021, Kimberly Lawrence purchases lakefront property from her neighbor, Josh Hutcherson, and agrees to pay the purchase price in 12 payments of $21,500 each, the first payment to be payable June 1, 2022. (Assume that interest compounded at an annual rate of 8.30% is implicit in the payments.) What is the purchase price of the property? (Round answer to 2 decimal places, e.g. 25.25.) Purchase price of the property (b) On January 1, 2021, Crane Corporation purchased 200 of the $1,000 face value, 7% coupon, 10-year bonds of Sterling Inc. The bonds mature on January 1, 2031, and pay interest annually beginning January 1, 2022. Crane purchased the bonds to yield 9.90%. How much did Crane pay for the bonds? (Round answer to 2 decimal places, e.g. 25.25.) Crane paid for the bonds
A man plans to take a vacation in 5 years. He wants to buy a certificate of deposit for $1300 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1500 for the trip? Assume that the interest on the loan is computed using simple interest. The rate he must obtain is
A man plans to take a vacation in 4 years. He wants to buy a certificate of deposit for $1200 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1700 for the trip? Assume that the interest on the loan is computed using simple interest The rate he must obtain is ___%
Ms. R. would like to buy a mobile home. For this purpose, she takes out a loan on 01.01.2021 Amount of 80,000 euros. An annual interest rate of 4.5% is set in the loan agreement. a) Ms. R. agrees with the bank that the debt plus interest will be in nine equal amounts to be repaid at the end of each year. The first payment is to be made on December 31, 2022. 1. How much is the annuity to be paid at the end of each year from December 31, 2022?2. Enter the repayment schedule line for the 7th year after the debt was taken on.3. Ms. R. considers instead of the annuities, rather advance equal quarter payments in the years 2022, 2023, 2024 . . To achieve in 2030. How much is the quarterly payment? b) Ms. R. agrees with the bank that the debt plus interest will be paid annuities in each case To repay 15,000 euros at the end of a year. The first payment is scheduled for December 31, 2022 respectively. How many years does she have to pay full annuities?
A couple plans to purchase a vacation home. The bank requires a 5% down payment on the $450,000 vacation home. The couple will finance the rest of the cost with a fixed-rate mortgage at 9% annual interest with monthly payments over 30 years. Complete the parts below. Do not round any intermediate computations. Round your final answers to the nearest cent if necessary. If necessary, refer to the list of financial formulas. (a) Find the required down payment. (b) Find the amount of the mortgage. (c) Find the monthly payment.
A couple plans to purchase a house. The bank requires a 20% down payment on the $470,000 house. The couple will finance the rest of the cost with a fixed- rate mortgage at 3% annual interest with monthly payments over 30 years. Complete the parts below. Do not round any intermediate computations. Round your final answers to the nearest cent if necessary. If necessary, refer to the list of financial formulas (a) Find the required down payment. $ (b) Find the amount of the mortgage. $0 (c) Find the monthly payment. $
You plan to purchase a $320,000 house using a 15-year mortgage obtained from your bank. The mortgage rate offered to you is 5.20 percent. You will make a down payment of 15 percent of the purchase price. a. Calculate your monthly payments on this mortgage. b. (1) Construct the amortization schedule for the mortgage. b. (2) How much total interest is paid on this mortgage? Answer is not complete. Complete this question by entering your answers in the tabs below. Req A Req B1 Amortization Schedule Month 1 2 3 179 180 Construct the amortization schedule for the mortgage? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Req 82 Total Interest Amortization Schedule for the 15-Year Mortgage Interest Cumulative Principal Principal 272,000.00 270,999.26 Cumulative Interest Ending Balance
Lamar is taking out a mortgage for $146,000 to buy a new house and is deciding between the offers from two lenders. He wants to know which one would be the better deal over the life of the mortgage loan, and by how much. Answer each part. Do not round intermediate computations, and round your answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) A bank has offered him a 15-year mortgage loan at an annual interest rate of 4.4%. Find the monthly payment. ? (b) An online lending company has offered him a 15-year mortgage loan at an annual interest rate of 4.8%. Find the monthly payment. (c) Suppose Lamar pays the monthly payment each month for the full term. Which lender's mortgage loan would have the lowest total amount to pay off, and by how much? O Bank The total amount paid would be $| less than to the online lending company. O Online lending company The total amount paid would be $| less than to the bank.
The Becker family is getting a home loan to finance a $260,000 mortgage. While looking for a mortgage, they found two alternatives: Mortgage A 30-year loan with an interest rate of 3.611% and a monthly payment of $1,184. Mortgage B 15-year loan with an interest rate of 2.7% Recall: Calculate the total amount paid for Mortgage A. Calculate the total interest paid for Mortgage A. Calculate the monthly payment for Mortgage B. Calculate the total amount paid for Mortgage B. Calculate the total interest paid for Mortgage B. Write a two or more sentences giving the Becker family some advice about which mortgage to choose. Why might the Becker family not take your advice from part c)? Answer in one or two sentences.
To start a new business, Alysha intends to borrow $25.000 from a local bank. If the bank asks her to repay the loan in 5 equal annual instalments of $6,935.24, determine the bank's effective annual interest rate on the ipan transaction. With annual compounding, what nominal rate would the bank quote for this loan?
Yolanda is taking out a mortgage for S145,000 to buy a new house and is deciding between the offers from two lenders. She wants to know which one would be the better deal over the life of the mortgage loan, and by how much. Answer each part. Do not round intermediate computations, and round your answers to the nearest cent. If necessary, refer to the (a) Her credit union has offered her a 30-year mortgage loan at an annual interest rate of 5.4%. Find the monthly payment. (b) A bank has offered her a 15-year mortgage loan at an annual Interest rate of 5.2%. Find the monthly payment. (c) Suppose Yolanda pays the monthly payment each month for the full term. Which lender's mortgage loan would have the lowest total amount to pay off, and by how much? O Credit union The total amount paid would be S less than to the bank. O Bank The total amount paid would be S less than to the credit union.
Example: In this exercise prepare an amortization schedule showing the payments for each loan. Joan Varozza plans to borrow $20,000 to stock her small boutique. She will repay the loan with semiannual payments for 5 years at 7% interest. SET UP AN AMORTIZATION TABLE