Construct an amortization schedule for a four-year, $20,000 loan at 9% interest
ID: 2765906 • Letter: C
Question
Construct an amortization schedule for a four-year, $20,000 loan at 9% interest compounded annually.
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Year
Beg Bal
PMT
INT
Prin Red
End Bal
1
2
3
4
-
Year
Beg Bal
PMT
INT
Prin Red
End Bal
1
2
3
4
-
Explanation / Answer
First step is to calculate the EMI or PMT we can use the excel formula for it
=PMT(0.09,4,-20000,0,0) =6137.37
Interest Beg Pricipal = 9%* Beginnig Principal each year
Pricipal red = PMT- Interest
Principal Remainig = Beginnig Pricipal - Principal red
So this how we calculat each step
Year Beg Balance PMT INT Principal red End Bal 1 20000 6,173.37 1,800.00 4,373.37 15,626.63 2 15,626.63 6,173.37 1,406.40 4,766.98 10,859.65 3 10,859.65 6,173.37 977.37 5,196.00 5,663.65 4 5,663.65 6,173.37 509.73 5,663.65 0.00