Please read the instructions carefully, and show all work to ensure accuracy. &

Question

Please read the instructions carefully, and show all work to ensure accuracy. & Only answer if you know how to solve the problem. Thank you very much, have a nice day.

Chino Co. developed a new sales gimmick to help sell its inventory of new automobiles. Because many new car buyers need financing, Sage offered a low downpayment and low car payments for the first year after purchase. It believes that this promotion will bring in some new buyers.

On January 1, 2017, a customer purchased a new $28,600 automobile, making a downpayment of $680. The customer signed a note indicating that the annual rate of interest would be 12% and that quarterly payments would be made over 3 years. For the first year, Chino Co. required a $349 quarterly payment to be made on April 1, July 1, October 1, and January 1, 2018. After this one-year period, the customer was required to make regular quarterly payments that would pay off the loan as of January 1, 2020.

Prepare a note amortization schedule for the first year. (Round answers to 0 decimal places, e.g. 38,548.) Cash Paid Interest Expense Discount Amortized Carrying Amount of Note Date Indicate the amount the customer owes on the contract at the end of the first year. (Round answer to o decimal places, e.g. 38,548.) The customer owes on the contract at the end of the first year s Compute the amount of the new quarterly payments. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) The new quarterly payments s

Explanation / Answer

a) Prepare a note amortization schedule for the first year. Date Cash Paid Interest Expense = 12%/4 Discount Amortized Carrying amount of loan 1/1/17 $27,920.00 4/1/17 $349.00 $837.60 $488.60 $28,408.60 7/1/17 $349.00 $852.26 $503.26 $28,911.86 10/1/17 $349.00 $867.36 $518.36 $29,430.21 1/1/18 $349.00 $882.91 $533.91 $29,964.12 b) The customer owes on the contract at the end of the first year $ $29,964.12 c) The new quarterly payments Principal $29,964.12 Rate = 12%/4 3.00% Period = 2 x 4 8 Quarterly Payments = PMT(3%,8,-29964.12) $4,268.58 d) d) Prepare a note amortization schedule for these new payments for the next 3 years. Date Cash Paid Interest Expense = 12%/4 Discount Amortized Carrying Amount of Loan 1/1/18 $29,964.12 4/1/18 $4,268.58 $898.92 $3,369.66 $26,594.46 7/1/18 $4,268.58 $797.83 $3,470.75 $23,123.72 10/1/18 $4,268.58 $693.71 $3,574.87 $19,548.85 1/1/19 $4,268.58 $586.47 $3,682.11 $15,866.73 4/1/19 $4,268.58 $476.00 $3,792.58 $12,074.15 7/1/19 $4,268.58 $362.22 $3,906.36 $8,167.80 10/1/19 $4,268.58 $245.03 $4,023.55 $4,144.25 1/1/20 $4,268.58 $124.33 $4,144.25 $0.00

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.