Question

The Lass Company recently took a $100, 000, 12%, 30-year mortgage to expand its factory. The...

The Lass Company recently took a $100, 000, 12%, 30-year mortgage to expand its factory. The monthly payment is $1,020. Compute the interest expense and principal re-payments for the first 2 months

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Answer #1

Interest on the first month for the loan taken by Lass Company = 100,000*12/1200*1 = $ 1,000

1st monthly payment = $1,020

Interest Payment for the 1st month = $ 1,000

Principal repayment for the 1st month = $1,020 - $1,000 = $20

Remaining Principal for the next month =  $ 100,000 - $20 = $ 99,980

Interest on the second month for the loan taken by Lass Company = 99,980*12/1200*1 = $ 999.80

Interest Payment for the 2nd month = $ 999.80

Principal repayment for the 2nd month = $1,020 - $999.80 = $20.2

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