Valley Produce received $50,000 in vendor financing at 3.8% compounded semi-annually for the purchase of harvesting machinery. The contract requires equal annual payments for seven years to repay the debt. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Prepare an amortization schedule that reflects a prepayment of $10,000 with the second scheduled payment. How much interest is saved as a result of the prepayment?

Question

Quizplus · Accepted Answer

The Answer of Valley Produce received $50,000 in vendor financing at 3.8% compounded semi-annually for the purchase of harvesting machinery. The contract requires equal annual payments for seven years to repay the debt. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Prepare an amortization schedule that reflects a prepayment of $10,000 with the second scheduled payment. How much interest is saved as a result of the prepayment?

Valley Produce Received $50,000 in Vendor Financing at 3