FIN-650 Module 1 DQ 2 - Problem 4-29 - Assume that your aunt sold her house on December 31,…
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FIN-650 Module 1 DQ 2 - Problem 4-29
Managerial Finance – Overview of Financial Management and Time Value of Money
Grand Canyon University
This discussion thread will be used to discuss the practice problems completed in this module. After completing the problems, submit your answers to the instructor. Your instructor will specify which problems will be reviewed for discussion. Post your answers to the posted problem to this discussion thread and discuss any challenges you had with completing the problems, tips that helped you arrive at the correct answers, and/or questions you may still have.
Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $10,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 10%; it calls for payments every 6 months, beginning on June 30, and is to be amortized over 10 years. Now, 1 year later, your aunt must inform the IRS and the person who bought the house about the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest dollar, what is the total amount of interest that was paid during the first year?