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

Uses of technology in accounting, Q. Uses of technology in accounting? ...

Q. Uses of technology in accounting? The computers of persons in a given building or department are frequently connected in a Local Area Network (LAN). These persons are able t

Accounting, illustrate business cycle with reference to a retail trader whi...

illustrate business cycle with reference to a retail trader which does business on a cash basics

External users of accounting information, Q. External users of accounting i...

Q. External users of accounting information? The external users of accounting information grouped into groups; everyone has different interests in the company and wants answers

Company law, I want a company law assignment

I want a company law assignment

Describe about post-closing trial balance, Q. Describe about post-closing t...

Q. Describe about post-closing trial balance? A post-closing trial balance is trial balances taken subsequent to the closing entries have been posted. The only accounts that mu

calculate wacc and rate of return, Calculate WACC and Rate of Return ...

Calculate WACC and Rate of Return Capital Structure: 50% debt and 50% equity financing Current cost of debt is 2% above prime (Prime is currently 2.5%) cost of equity is e

Balancesheet derivation question, Assignment Comments –    Debt-to-assets...

Assignment Comments –    Debt-to-assets ratio: 50% Current Ratio: 1.8x Total assets turnover: 1.5x       Days sales outstanding: 36.5 days* Gross profit margin

Explain about sales account, Q. Explain about Sales account? In theory ...

Q. Explain about Sales account? In theory sellers could record both sales allowances and sales returns as debits to the Sales account for the reason that they cancel part of th

Show debit and credit column, Q. Show Debit and Credit column? - Debit ...

Q. Show Debit and Credit column? - Debit column. In the debit column the sum of the debit is on the same line as the title of the account debited. - Credit column. In the cr

Hotel, data dictionary

data dictionary

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