Calculate interest rate, Accounting Basics

Assignment Help:

I chose table 2-4 Loan Amortization Schedule, $100,000 at 6% for 5 years to discuss. Table 2-4 relates to the other two tables in that it is the opposite of the other two tables. Table 2-4 illustrates paying down an initial amount borrowed, where the other two tables illustrate either the present or future value of money invested.

If one were to use a calculator to solve the amortization of a loan, we would input N= length of the loan, I/YR= interest rate, initial loan amount, PV=100000, and the ending value or FV=0 (Brigham & Houston,2007).

If one were to use Microsoft Excel to solve the problem, I would list the length of the loan vertically and horizontally would be the Beginning amount, payment amount, interest, amount paid to principal and the ending balance.

My example: If I were to take out an auto loan for $16,000 at 5% and it had to be repaid in 4 years:

Year

Beginning Amount

Payment

Interest

Repayment of Principal

Ending Balance

1

$16,000

$4512.19

$800

$3712.19

$12287.81

2

12287.81

$4512.19

614.39

3897.80

8390.01

3

8390.01

4512.19

419.50

4092.69

4297.32

4

4297.32

4512.19

214.87

4298.32

$0

Initially, I solved this problem using my financial calculator to find the payment amount. Then I figured out the interest on year one (16000x.05), I subtracted the interest from the payment amount to find the principal. I subtracted the principal payment from the beginning amount to get the ending balance. I then carried the ending balance to the next line to use as the starting figure and went from there.


Related Discussions:- Calculate interest rate

Concepts of accounting, implication of applying aacounting concept wronly

implication of applying aacounting concept wronly

Define an accounting system, Q. Define an accounting system? Effects fr...

Q. Define an accounting system? Effects from a recent survey of 1400 chief financial officers (CFOs) indicate that tomorrow's accounting professionals will be called upon to br

Determine the real rate of return on investment, 1) A) Suppose Jean Splicer...

1) A) Suppose Jean Splicer, an investor, buys $300,000 of shares of stock in a diversified bundle of Bio-tech firms and exactly one year later sells those shares for $315,000. Assu

On june 1st, On June 1st, Green Pea, Inc. purchased $1,200 worth of supplie...

On June 1st, Green Pea, Inc. purchased $1,200 worth of supplies on account. How does this transaction affect Green Pea's accounts? a. Increase supplies and accounts payable by $

.., Ask queshow to be an experttion #Minimum 100 words accepted#

Ask queshow to be an experttion #Minimum 100 words accepted#

Accounts receivable - ar, Money payable by customers (individuals or corpor...

Money payable by customers (individuals or corporations) to the other entity in exchange for goods or services that have been given or used, but not yet paid for. Receivables typic

Explain about accrual basis and periodicity, Q. Explain about Accrual basis...

Q. Explain about Accrual basis and periodicity? Accrual basis and periodicity demonstrated that financial statements more accurately reflect the financial status and operations

Explain the purpose and objective of accounting, Weekly tasks or assignment...

Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy fou

Objectives of financial reporting, Q. Objectives of financial reporting? ...

Q. Objectives of financial reporting? Financial reporting objectives are the broad overriding objectives sought by accountants engaging in financial reporting. According to the

Dividends paid to owners, Q. Dividends paid to owners? Stockholders' eq...

Q. Dividends paid to owners? Stockholders' equity is (a) improved by capital contributed by stockholders and by revenues earned through operations and (b) decreased by expenses

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd