Question
Amortization schedule.Chuck Ponzi has talked an elderly woman into loaning him $35,000 for a new business venture. She has, however, successfully passed a finance class
Amortization schedule.Chuck Ponzi has talked an elderly woman into loaning him
$35,000
for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the
$35,000
with an annual interest rate of
12%
over the next
5
years. Ponzi may choose to pay off the loan early if interest rates change during the next
5
years. Determine the ending balance of the loan each year under the three different payment plans:
a. the discount loan
b. the interest-only loan
c. the fully amortized loan.
a.If Chuck chooses the discount loan, what is the ending balance of the discount loan in year 1?
$3920039200
(Round to the nearest cent.)
What is the ending balance of the discount loan in year 2?
$4390443904
(Round to the nearest cent.)
What is the ending balance of the discount loan in year 3?
$49172.4849172.48
(Round to the nearest cent.)
What is the ending balance of the discount loan in year 4?
$55073.1755073.17
(Round to the nearest cent.)
What is the ending balance of the discount loan in year 5?
$0.000.00
(Round to the nearest cent.)
b.If Chuck chooses the interest-only loan, what is the ending balance of the interest-only loan in year 1?
$3500035000
(Round to the nearest cent.)
What is the ending balance of the interest-only loan in year 2?
$3500035000
(Round to the nearest cent.)
What is the ending balance of the interest-only loan in year 3?
$3500035000
(Round to the nearest cent.)
What is the ending balance of the interest-only loan in year 4?
$3500035000
(Round to the nearest cent.)
What is the ending balance of the interest-only loan in year 5?
$0.000.00
(Round to the nearest cent.)
c.If Chuck chooses the fully amortized loan, what is the ending balance of the fully amortized loan in year 1?
$nothing
(Round to the nearest cent.)
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