ON 12/31/05, XYZ INC. PURCHASED A NEW PIECE OF EQUIPMENT FOR $1,200,000. A LOAN IN THE TOTAL AMOUNT WAS TAKEN OUT TO PURCHASE THE EQUIPMENT. THE TERMS OF THE LOAN ARE AS FOLLOWS:
INTEREST RATE: 8%
# OF MONTHLY PYMTS: 48
MONTHLY PAYMENT: 29,101.50
PYMT DUE ON: FIRST OF EACH MONTH
I NEED HELP TO PREPARE AN AMORTIZATION SCHEDULE FOR THE 48 MONTH LOAN IN AN EXCEL SPREADSHEET, ASSUMING THE EQUIPMENT HAS A FOUR YEAR USEFUL LIFE WITH A SALVAGE VALUE OF $200,000, DETERMINE THE NET VALUE OF THE EQUIPMENT THAT WILL BE REPORTED ON THE BOOKS AT THE END OF EACH YEAR USING STRAIGHT LINE DEPRECIATION.
Please see the attached file. The closing book value would be the net value of the equipment in the books
QUESTION FROM STUDENT:
I don't understand how there is no interest paid the first month. The formula used to calculate the interest, would that be the same formula used all the time, just replacing the percentage with ...
The solution explains how to prepare an amortization schedule using excel.