Lg6 442 loan payment determine the equal annual end

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Unformatted text preview: rest rate on the loan is 13%. As part of her firm’s detailed financial planning, Liz wishes to determine the annual interest deduction attributable to the loan. (Because it is a business loan, the interest portion of each loan payment is tax-deductible to the business.) a. Determine the firm’s annual loan payment. b. Prepare an amortization schedule for the loan. c. How much interest expense will Liz’s firm have in each of the next 3 years as a result of this loan? LG6 4–45 Monthly loan payments Tim Smith is shopping for a used car. He has found one priced at $4,500. The dealer has told Tim that if he can come up with a down payment of $500, the dealer will finance the balance of the price at a 12% annual rate over 2 years (24 months). a. Assuming that Tim accepts the dealer’s offer, what will his monthly (end-ofmonth) payment amount be? b. Use a financial calculator or Equation 4.15a (found in footnote 9) to help you figure out what Tim’s monthly payment would be if the dealer were willing to finance the balance of the car price at a 9% yearly rate. 184 PART 2 Important...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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