Discussion Questions

Question 1

Assume the following: Payment #1 totals $1,600 ($1,200 principal and $400 interest expense); Payment #2 totals $1,600 ($1,300 principal and $300 interest expense); and the remaining principal balance before these two payments is $50,000.

If the amortization schedule's "Remaining Principal Balance" column prior to these payments amounts to $50,000, what is the balance in the column after these payments?

Please discuss amortization and provide three examples where amortization schedules will come in handy in the business world or in your personal lives.

Question 2

Define and discuss cash equivalents and provide three examples.