Reference no: EM131644648

Problem - Bridgeport Inc. developed a new sales gimmick to help sell its inventory of new automobiles. Because many new car buyers need financing, Bridgeport offered a low downpayment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers.

On January 1, 2017, a customer purchased a new $28,200 automobile, making a downpayment of $600. The customer signed a note indicating that the annual rate of interest would be 8% and that quarterly payments would be made over 3 years. For the first year, Bridgeport required a $345 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2018. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1, 2020

(a) Prepare a note amortization schedule for the first year

(b) Indicate the amount the customer owes on the contract at the end of the first year.

(c) Compute the amount of the new quarterly payments.

(d) Prepare a note amortization schedule for these new payments for the next 2 years.