Question
Amortization.Loan Consolidated Incorporated (LCI) is offering a special one-time package to reduce Custom Autos' outstanding bills to one easy-to-handle payment plan. LCI will pay off
Amortization.Loan Consolidated Incorporated (LCI) is offering a special one-time package to reduce Custom Autos' outstanding bills to one easy-to-handle payment plan. LCI will pay off the current outstanding bills of
$236,000
for Custom Autos if Custom Autos will make an annual payment to LCI at an interest rtae of
12%
over the next
5
years.
a.What are the annual payments of the loan?
b.What is the amortization schedule for this loan if Custom Autos wants to pay off the loan before the loan maturity in
5
years?
c.When will the balance be half paid off?
d.What is the total interest expense on the loan over the
5
years?
Question content area bottom
Part 1
a. What is the annual payment of the loan?
$65468.6965468.69
(Round to the nearest cent.)
Part 2
b.Prepare the amortization schedule for this loan if Custom Autos wants to pay off the loan before the loan maturity in
5
years. What is the interest expense of the loan in year 1?
$28,320.0028,320.00
(Round to the nearest cent.)
Part 3
What is the principal reduction of the loan in year 1?
$enter your response here
(Round to the nearest cent.)
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