Jul 16, 2017 Research papers

How do the interest payment, principal payment, and total payment change when a loan is amortized?

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Time Value of Money

INSTRUCTIONS:

Pearland Medical Center has just borrowed $1,000,000 on a five-year loan with annual payment term at a 12 percent rate. The first payment will be due one year from now.

1. Construct the amortization schedule for this loan.
2. How do the interest payment, principal payment, and total payment change when a loan is amortized?
3. After reading Franklin’s article "Tight Capital Market’s Impact on Hospitals", discuss how the issues in the non-profit (tax-exempt) borrowing market in 2008 and 2009 encouraged consolidation in the health care industry through mergers and acquisitions. 

CONTENT:

Time Value of Money Name Course Instructor Date Pearland Medical Center has just borrowed $1,000,000 on a five-year loan with annual payment term at a 12 percent rate. The first payment will be due one year from now. Amortization schedule for this loan The loan payment formula is based on the ordinary annuity formula, given that there are future periodic payments to be made annually. The monthly payments is calculated A=i*P (1+i) n/ (1+i) n-1 which is $ 22,244.45. However, this is an annual payment and the amount payable is P= PV/ PVIFA. PV=$1,000, 000 and hence P= 1,000,000/ 3.6048= 277,407.73 The staring interest rate is 12% of 1,000,000 being 120,000 The subsequent interest rates for year 2 to 5 are 12% of the ending balance form the previous year (beginning balance of that year) DatePmt #PaymentPrincipalInterestBalanceStarting Balance$1,000,000.00 Year 11$277,409.73 $157,409.73 $120,000.00 $842,

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