Question
Most of us intuitively understand that a dollar required today does not have the same value as a dollar needed (or utilized) in the future.
Most of us intuitively understand that a dollar required today does not have the same value as a dollar needed (or utilized) in the future. This is due to several factors including interest rates, compounding factors, discounting factors and financial risk. Compare the total payback for a $100,000, 5%, 15 year mortgage and a $100,000, 5%, 30 year mortgage. Suggest a reason for the difference.
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Answer Payback of Mortgage at 5 for 15 years Year Mortgage Equated Annual Instalment Interest 5 Principal Balance 0 100000 96341898 100000 1 100000 96341898 5000 46341898 9536581 2 96341898 476829051 ...
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Financial and Managerial Accounting
Authors: Horngren, Harrison, Oliver
3rd Edition
978-0132497992, 132913771, 132497972, 132497999, 9780132913775, 978-0132497978
