Sam Borrowed $10,000 at Prime + 2% on March 29

question 11

Essay

Sam borrowed $10,000 at prime + 2% on March 29. He agreed to payments of $2,000 on the first day of each month beginning May 1. The prime rate was 4% when Sam took out the loan. Construct a full repayment schedule showing details of the allocation of each payment to interest and principal. What is the final payment?

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Definitions:

Book Value

The net value of a company's assets found on its balance sheet, calculated as total assets minus intangible assets (patents, goodwill) and liabilities.

Net Income

The amount of profit left after all expenses, taxes, and costs have been subtracted from total revenue.

Corporate Tax Rate

The share of a business's profits that is remitted to the government as taxation.

Variable Costs

Costs that vary in relation to a company's operational activities, like labor and material expenditures.