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Financing and Amortization Calculations

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The partnership has arranged financing in the amount of $1, 034, 600 at 7%compounded semi-annually, with a 15 year amortization and 5 year term.

a. How many months
b. payment?
c. Interest for first month.

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Solution Summary

The solution explains how a 15 year amortization can result in a five year note. The payment amounts are calculated including the balance on the note at the end of five years.

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a. The five year term means that there will be 10 semi-annual payments and then the entire remaining balance is due. The final payoff is normally called a balloon payment. There is a balloon payment because the loan is being amortized over 15 ...

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