How much interest was included in the first payment
Course:- Finance Basics
Reference No.:- EM13298435

Assignment Help
Assignment Help >> Finance Basics

Jan sold her house on December 31 and took a $10,000 mortgage as part of the payment. The 10-year mortgage has a 10% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS form 1040 the amount of interest that was included in the two payments she received during the year.

a. What is the dollar amount of each payment Jan receives?

b. How much interest was included in the first payment? How much repayment of principal was included? How do these values change for the second payment?

c. How much interest must Jan report on Schedule B for the first year? Will her interest income be the same next year?

d. If the payments are constant, why does the amount of interest income change over time?


Put your comment

Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
A multiple regression model is estimated using 3 explanatory variables. The r^2 was found to be 0.77. the coefficient of determination for the regression of X2 on the other
Assume the following bond quotes for IOU Company appear in the financial page of today's newspaper. Suppose the bond has a face value of $1,000 and current date is April 15, 2
Speculate why AT&T, Honeywell, and Verizon are changing the method for accounting for pension gains and losses. Then, speculate why these companies waited two years after the
FINC620- Rosita's has a cost of equity of 13.8% and a pre-tax cost of debt of 8.5%. The debt-equity ratio is .60 and the tax rate is .34. What is Rosita's unlevered cost of
The United States exports a substantial amount of scrap iron and steel to Turkey, China, Canada, and other countries. - Why do some U.S. users of scrap iron and steel support
Karen wants to invest $750 per quarter for a period of 25 years in order to accumulate a value of $120,000. What minimum annual rate (compunded quarterly) would Karen need t
A firm with a corporate wide debt-to-equity ratio of 1:2 an after-tax cost of debt of 7% and a cost of equity capital of 15% is interested in pursuing a foreign project.
Second, as part of your response to 1 above, where applicable under the respective and/or select criteria, please identify the financial ratio's that are critical for suppor