On January 1, 2020, a company buys a piece of equipment costing $666,633 with a 14% installment note. The note will be paid off with 6 semiannual payments over three years (2 payments a year for 3 years). Each payment is $139,857. Required:
Prepare the installment note schedule

Installment Note Schedule:

Period      Beginning Balance    Interest       Principal     Ending Balance

1. Year #1$666,633.00$46,664.31$93,192.49$573,440.51

2. Year #1$573,440.51$40,140.84$99,715.97$473,724.54

3. Year #2$473,724.54$33,160.72$106,696.09$367,028.45

4. Year #2$367,028.45$25,691.99$114,164.81$252,863.64

5. Year #3$252,863.64$17,700.45$122,156.35$130,707.29

6. Year #3$130,707.29$9,149.51$130,707.29$0.00

Explanation:

a) Data and Calculations:

Cost of equipment = $666,633

Rate of interest = 14%

Payment terms = semiannual payments over three years

Payment for each period = $139,857

Loan Amount  $666,633

Loan Term  3  years  0  months

Interest Rate  14

Compound  Semi-annually

Pay Back  Every 6 Months

Results:

Payment Every 6 Months = $139,856.80 = $139,857 approx.

Total of 6 Payments = $839,140.82

Total Interest = $172,507.82

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