An annual percentage rate, or APR, represents how much

 

interest is paid over a year.

interest is paid over many years.

principal is paid over a year

principal is paid over many years.

On 6/1/14, you closed on a mortgage for the purchase of a newhome. It’s a $250,000 mortgagepayable over 30 years at 4% interest, collateralized by your newhome.Payments of principaland interest are made at the end of each month. Compute the amount of your monthlypayment. Create an Excelspreadsheet showing principal and interest amortization for thelife of the mortgage using our standard columns: payment number,payment date, beginning carrying value, interest rate, interestexpense, cash paid, principal, and ending carryingvalue.

1/What is the total interest thatwill be paid out over the 30-year life of the mortgage?

2/If the mortgagee were to pay an additional $100 of principalfor each month of the mortgage, how much more quickly would he/shepay off the principal balance of the mortgage? What would be thetotal interest paid out over the life of the mortgage when theprincipal payments are accelerated in this fashion?

Why is compound interest preferable to the simple interest

a. Compound interest pays at least double the interest on the principal during each month.

b. Compound interest is paid by the week or by the month, not only once during a year.

c. Compound interest is based on the entire principal, not just a percentage of the principal.

d. Compound interest pays interest on the principal and the interest earned in each period.

n January 1 of 20Y2, Hebron Company issued a $19,000, 4-year, 11% installment note to Ventsam Bank. The note requires annual payments of $6,124, beginning on December 31 of 20Y2.

Journalize the entries to record the following.

Issued the note for cash at its face amount.

Paid the annual payment on the note, which consisted of interest of $2,090 and principal of $4,034. If an amount box does not require an entry, leave it blank.

Paid the annual payment on the note, which included interest of $607. The remainder of the payment reduced the principal balance on the note. If an amount box does not require an entry, leave it blank.