About the loan amortization

Assignment Help Financial Management

Reference no: EM13877683

Loan Amortization

Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $15,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 6%, but it calls for payments every 6 months, beginning on June 30, and is to be amortized over 10 years. Now, 1 year later, your aunt must inform the IRS and the person who bought the house about the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest dollar, what is the total amount of interest that was paid during the first year?

Reference no: EM13877683

Questions Cloud

Considering new capital investment project : Cactus Cushions, a non-traditional pillow manufacturer, is considering a new capital investment project that requires a $40 million investment today. Next year, the project will generate expected pre-tax cash flows of $2 million, all of which are tax..

During times of inflation-best for cash flow : During times of inflation, which of these inventory accounting methods is best for cash flow? LIFO, because the most expensive goods are recorded as being sold first, resulting in a higher cost of goods sold and a lower reported net income.

Compute both the annual percentage-r simple : Krystal Magee invested $150,000 18 months ago. Currently, the investment is worth $179,422. Krystal knows the investment has paid interest every month, but she doesn't know what the yield on her investment is. Help Krystal. Compute both the annual pe..

What is the present value of the cash flow stream : You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. A large networking company wants to incorporate your software into their systems and is offering to pay you $500,0..

About the loan amortization : Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $15,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 6%, but it calls for payments every 6 ..

Value at risk for expected return on risky portfolio : You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 4% and a risky portfolio, P, constructed with 2 risky securities X and Y. The optimal weights of X and Y in P are 40% and 60% ..

Used break-even point analysis : Give an example from your own experience where you used a break-even point analysis. What parameters were necessary to find the break-even point? Please include your break-even calculations based on the equation from page 8 in the textbook

Complete portfolio should you invest in treasury bills : You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 4% and a risky portfolio, P, constructed with 2 risky securities X and Y. To form a complete portfolio with an expected rate o..

What will be the increase in total market value for the firm : A consultant has collected the following information regarding Hobbit Manufacturing: Operating income (EBIT) $600 million, Debt $0, Interest expense $0, Tax rate 35%, Cost of equity 7%, WACC 7% . The company has no growth opportunities (g = 0), so th..

User Account

All Pages