Fully Amortizing Installment Notes

question 25

Essay

Fully amortizing installment notes
When Sue Meadow purchased a home,she signed a $150,000,12%,fully amortizing mortgage note,payable at $1,543 per month.After making the first monthly payment,Meadow received a notice from the bank stating that $1,500 of the payment had applied to interest,and only $43 reduced the principal amount of the loan.Meadow does not understand how this loan is fully amortizing over a period of 30 years.She computes that at $43 per month,it will take approximately 3,488 months (or 290 years)to repay this loan.Evaluate Meadow's analysis.

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Definitions:

Tangible Assets

Physical and material assets owned by a company, such as buildings, machinery, and inventory, which have a defined monetary value and can be physically touched.

Knowledge

constitutes the facts, information, and skills acquired through experience or education, encompassing theoretical and practical understanding of a subject.

Vacating Employees

Refers to the process of employees leaving their current positions, either voluntarily or involuntarily.

Due Diligence

A comprehensive appraisal undertaken by a prospective buyer, especially of a business, to establish its assets and liabilities and evaluate its commercial potential.