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Homework answers / question archive / Jan sold her house on December 31 and took a $5,000 mortgage as part of the payment
Jan sold her house on December 31 and took a $5,000 mortgage as part of the payment. The 10-year mortgage has a 6% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year lan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year . What is the dollar amount of each payment Jan receives? Round your answer to the nearest cent. $ b. How much interest was included in the first payment? Round your answer to the nearest cent. $ How much repayment of principal was included? Do not round intermediate calculations. Round your answer to the nearest cent. $ How do these values change for the second payment? I. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal increases II. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal decreases. III. The portion of the payment that is applied to interest and the portion of the payment that is applied to principal remains the same throughout the life of the loan IV. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal also declines. V. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal also increases -Select- c. How much interest must Jan report on Schedule B for the first year? Do not round Intermediate calculations. Round your answer to the nearest cent. $ Will her interest income be the same next year? -Select- d. If the payments are constant, why does the amount of interest income change over time? 1. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal increases 11. As the loan is amortized (paid off), the beginning balance, hence the interest charge declines and the repayment of principal increases III. As the loan is amortized (paid off), the beginning balance, hence the interest charge dedines and the repayment of principal declines IV. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal declines. V. As the loan is amortized (paid off), the beginning balance declines, but the interest charge and the repayment of principal remain the same -Select
TOUTUBE A Maps GAGE MINDTAP Search this court 2 Homework Jan sold her house on December 31 and took a $5,000 mortgage as part of the payment. The 10-year mortgage has a 6% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year. a. What is the dollar amount of each payment Jan receives? Round your answer to the nearest cent. $ b. How much interest was included in the first payment? Round your answer to the nearest cent. $ How much repayment of principal was included? Do not round intermediate calculations. Round your answer to the nearest cent. s How do these values change for the second payment? 1. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal increases. II. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal decreases III. The portion of the payment that is applied to interest and the portion of the payment that is applied to principal remains the same throughout the life of the loan IV. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal also declines. V. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal also increases. -Select- C. How much interest must lan report on Schedule B for the first year? Do not round intermediate calculations. Round your answer to the nearest cent. $ Will her interest income be the same next year? -Select- d. If the payments are constant, why does the amount of interest income change over time? 1. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal increases. II. As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal increases. 11. As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal declines. IV. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal declines. V. As the loan is amortized (paid off), the beginning balance declines, but the interest charge and the repayment of principal remain the same -Select- 326 AM 9/25/2020 . pe here to search
Jan sold her house on December 31 and took a $5,000 mortgage as part of the payment. The 10-year mortgage has a 6% nominal interest rate, but it calls for semiannual payments beginning next June 30. Next year Jan must report on Schedule B of her IRS Form 1040 the amount of interest that was included in the two payments she received during the year a. What is the dollar amount of each payment Jan receives? Round your answer to the nearest cent. $ b. How much interest was included in the first payment? Round your answer to the nearest cent. $ How much repayment of principal was included? Do not round intermediate calculations. Round your answer to the nearest cent. $ How do these values change for the second payment? 1. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal increases. II. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal decreases. III. The portion of the payment that is applied to interest and the portion of the payment that is applied to principal remains the same throughout the life of the loan IV. The portion of the payment that is applied to interest declines, while the portion of the payment that is applied to principal also declines. V. The portion of the payment that is applied to interest increases, while the portion of the payment that is applied to principal also increases -Select- C. How much interest must Jon report on Schedule B for the first year? Do not round intermediate calculations. Round your answer to the nearest cent. 5 Will her interest income be the same next year? -Select- d. If the payments are constant, why does the amount of interest income change over time? I. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal increases II. As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal increases. III. As the loan is amortized (paid off), the beginning balance, hence the interest charge, declines and the repayment of principal declines. IV. As the loan is amortized (paid off), the beginning balance, hence the interest charge, increases and the repayment of principal declines. V. As the loan is amortized (paid off), the beginning balance declines, but the interest charge and the repayment of principal remain the same. 5:43 PM
Mortgage amount = $5,000
No. of years = 10 ( semi-annual )
Total Installments = 10*2 = 20
Rate of interest = 6% and 3% ( semi-annual)
Ans. a:
Semiannual Installlment payment
Here, p= mortgage amount
r = semi-annuual rate of interest
n = total installments
So, Semiannual Installlment payment =
= $ 336.08
So, Dollar amount of each payment is Jan receives is $ 336.08
Ans. b:
Interest in first payment = semi-annuual rate of interest x mortgage amount = 0.03 x $ 5,000 = $ 150
Repayment of principal amount included in first installment = installment payment – Interest amount
= 336.08 - 150 = $186.08
These values will change on payment of further installments. On continous payments of installment, principal goes on decreasing and hence interest amount also decreases. Each installment remains same and principal repayment amount goes on increasing.
So, Option I i.e The portion of payment that is applied to interest declines, while the portion of the payment that is applied to principal increases.” is correct answer.
Ans. c:
Principal amount after 1st installment paymnet. = 5000 - 186.08 = 4813.92
Interest in 2nd installment = 4813.92 * 3% = 144.41
So, Total interest as per Schedule B for the first year ( including 2 installments) = 150 + 144.41 = $294.41
Ans. d:
If the payments are constant and loan is amortized i.e paid off then it means interest charge goes on declining with payment of each installment and repayment of principal amount increasess.
Therefore, OPTION II. is correct.
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