Prepare an amortization schedule for a three-year loan of $84,000. The interest
ID: 2642654 • Letter: P
Question
Prepare an amortization schedule for a three-year loan of $84,000. The interest rate is 9 percent per year, and the loan agreement calls for a principal reduction of $28,000 every year. How much total interest is paid over the life of the loan? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Leave no cells blank. You must enter '0' for the answer to grade correctly.)
Year
Beginning
Balance
Total
Payment
Interest
Payment
Principal
Payment
Ending
Balance
1
$
$
$
$
$
2
3
Prepare an amortization schedule for a three-year loan of $84,000. The interest rate is 9 percent per year, and the loan agreement calls for a principal reduction of $28,000 every year. How much total interest is paid over the life of the loan? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Leave no cells blank. You must enter '0' for the answer to grade correctly.)
Explanation / Answer
Amortization schedule:
Total payment column is arrived by adding principal paymen +interest amount.
Demonstrated as under for first year for easy understanding:
Balance at the begining of the first year = $84,000.
As the pricipal repayment is known which is $ 28,000.
Interest on $84,000 @ 9% which is $7,560 is added to $28,000 to arrive at total payment.
Similary for all for the next two years.
Year Beginning balance Total payment Interest payment Principal payment Ending balance 1 $ 84,000.00 $ 35,560.00 $ 7,560.00 $ 28,000.00 $ 56,000.00 2 $ 56,000.00 $ 33,040.00 $ 5,040.00 $ 28,000.00 $ 28,000.00 3 $ 28,000.00 $ 30,520.00 $ 2,520.00 $ 28,000.00 $ -