How much interest is included in the first payment

Assignment Help Financial Management

Reference no: EM131962324

Jane bought her house on December 31 and took a $10,000 mortgage (is an annuity) 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 Jane must report on her Tax Form the amount of annual interest payment that is included in her first two payments during the year.

a. How much interest is included in the first payment? How much principal is included?

b. How much annual interest payment for Jane in the first year (the first two payments in total)?

c. The payment (PMT) is constant each time, why does the amount of interest payment change over time?

Reference no: EM131962324

Questions Cloud

Calculate the no-arbitrage forward price on this contract : Calculate the “no-arbitrage” forward price on this contract (Fo).

Maximum allowable discounted payback period is three years : if the appropriate cost of capital is 8 percent and the maximum allowable discounted payback period is three years.

Utilizes the time value of money : Which of the following utilizes the time value of money?

Depreciation expense for the first pro forma year : Virginia LLC has base sales of 100 and depreciation expense is 25% of sales. Assuming a 25% increase in sales, depreciation expense for the first pro forma year

How much interest is included in the first payment : How much interest is included in the first payment? How much principal is included?

What is no-arbitrage forward price on this forward contract : What is the “no-arbitrage” forward price on this forward contract? What is the value of the forward contract position at expiration (VT)?

Five equal annual payments at interest rate : If you borrow $1,600 and agree to repay the loan in five equal annual payments at an interest rate of 12%, what will your payment be?

Calculate the profit the firm will make on this asset : At what rate does the firm just break even? calculate the profit the firm will make on this asset.

Investment while recovering the principal in sinking fund : If the investor is to receive 4.5% annual return on the investment while recovering the principal in a sinking fund earning 3% per year?

User Account

All Pages