Question

1. On January 1, 2018, Oakbrook Inc. rendered services to Beghun Corp. at an agreed price of $102,049, accepting $40,000 down payment and agreeing to accept the balance in four equal installment notes of $20,000 receivable each December 3

Instructions:

1. Compute the implied interest rate for the installments.
2. Prepare the amortization table for the payments.

Answer 1

Total cost	102,049
Down payment	40,000
Borrowed amount	62,049
Annual payment	20,000
Installments	4
Total installment payment	80,000	(20,000*4)
Additional payment	17,951	(80,000-62,049)

Implied Interest rate

11%

(=RATE(B5,B4,-B3)

It is an excel formula, B5= no of years, B4=annual payment and B3=borrowed money.

Year	Installment	Principal	Interest	Balance
0				62,049
1	20,000	13,175	6,825.35	48,874
2	20,000	14,624	5,376.15	34,250
3	20,000	16,232	3,767.53	18,018
4	20,000	18,018	1,981.97	0
			17,951.00