Prepare an amortization schedule for a five-year loan of $55,000. The interest r
ID: 2382897 • Letter: P
Question
Prepare an amortization schedule for a five-year loan of $55,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Leave no cells blank - be certain to enter "0" wherever required.)
How much interest is paid in the third year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
How much total interest is paid over the life of the loan? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
$
Year BeginningBalance
Total
Payment
Interest
Payment
Principal
Payment
Ending
Balance 1 $ $ $ $ $ 2 3 4 5
Explanation / Answer
Formula for calculation of EMI=PMT(rate,nper,pv)
nper =5
rate=.08
pv=$55,000
=PMT(.08,5,55,000)
=$13,775.11.
Ammortization table:
Interest payment in the third year:
interest paid in the third year from the above table=$2,839.98
Total interest paid:
Total interest paid calculated in the above ammotization table =$13,875.52
Year Beginning balance (A) Total payment (B) Interest payment C=A*8% Principal payment D=B-C Ending balance E=A-D 1 $55,000.00 $13,775.11 $4,400.00 $9,375.11 $45,624.89 2 $45,624.89 $13,775.11 $3,649.99 $10,125.12 $35,499.77 3 $35,499.77 $13,775.11 $2,839.98 $10,935.13 $24,564.64 4 $24,564.64 $13,775.11 $1,965.17 $11,809.94 $12,754.70 5 $12,754.70 $13,775.11 $1,020.38 $12,754.73 -$0.03 Total $68,875.55 $13,875.52 $55,000.03