A company issues a $200,000, 5%, six-year note on January 1, 2021. If the monthly payment...
A company issues a $200,000, 5%, six-year note on January 1, 2021. If the monthly payment is $3,220.99, by how much will the carrying value decrease when the first month’s payment is made on January 31, 2021?
Multiple Choice
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$833.33
-
$4,054.32
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$3,220.99
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$2,387.66
Homework Answers
Value of Note = $200,000
First Month Interest = $200,000*5%*1/12 = $833.33
First Month's Installment = $3,220.99
So, first Month's principal amount will be Installment - interest
$3,220.99 - $833.33
=$2,387.66
Carrying value will be decrease when the first month's payment is made is $2,387.66
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