Prepare an amortization schedule for a five-year loan of $60,000. The interest r
ID: 2649529 • Letter: P
Question
Prepare an amortization schedule for a five-year loan of $60,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
How much interest is paid in the third year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Prepare an amortization schedule for a five-year loan of $60,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Explanation / Answer
Year
Beginning Balance (a)
Total Payment (b)
Interest Payment (c ) = a x 9 %
Principal Payment (d)=a-c
Ending Balance (e )= a-d
1
60000.00
15425.35
5400.00
10025.35
49974.65
2
49974.65
15425.35
4497.72
10927.63
39047.02
3
39047.02
15425.35
3514.23
11911.12
27135.90
4
27135.90
15425.35
2442.23
12983.12
14152.78
5
14152.78
15425.35
1272.57
14152.78
0
Total
77126.75
17126.75
60000.00
Present Value of an annuity for five years at 9 % interest rate (PVAF)= 3.8897
Formula for PVAF= [1-1/(1+i)n]/i
Where
Year
Beginning Balance (a)
Total Payment (b)
Interest Payment (c ) = a x 9 %
Principal Payment (d)=a-c
Ending Balance (e )= a-d
1
60000.00
15425.35
5400.00
10025.35
49974.65
2
49974.65
15425.35
4497.72
10927.63
39047.02
3
39047.02
15425.35
3514.23
11911.12
27135.90
4
27135.90
15425.35
2442.23
12983.12
14152.78
5
14152.78
15425.35
1272.57
14152.78
0
Total
77126.75
17126.75
60000.00