The Gomez Company Inc bought a machine for $175,000. They paid 20% down and amortized the...
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The Gomez Company Inc bought a machine for $175,000. They paid 20% down and amortized the rest at 11.2% over a 3-year period.
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Find their Quarterly payment.
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Using MS-Excel, prepare an amortization table to show how the payments are made and how interest and principal balance are determined
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How much will the company owe after 18 months? What is the amount of interest during their 5th payment?
Homework Answers
Answer:
Loan amount = Machine cost - down payment = 175000 - 175000 * 20% = $140,000
Quarterly interest rate = 11.2% / 4 = 2.8%
Number of quarterly payments = 3 * 4 = 12
Quarterly payment = PMT (rate, nper, pv, fv, type) = PMT (2.8%, 12, -140000, 0, 0) = $13,897.30
Quarterly payment = $13,897.30
Amortization schedule is as follows:
From above amortization schedule, we find:
Amount the company owe after 18 months (6 quarters) = $75,785.95
Amount of interest during their 5th payment = $2,754.73
The excel (amortization schedule) with 'show formula' is as below:
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