Prepare an amortization schedule for the first 3 years of a 10 years loan @ 6% i
ID: 2804679 • Letter: P
Question
Prepare an amortization schedule for the first 3 years of a 10 years loan @ 6% interes, annaal puyments and a loan constant of.13586. The loan amount is $250,000 Total payment Interest Principal Balance Year 1 Year2 Year 3 Totals #1 I. What is the total payments over the 3-year period a) $33.965 6 S101,89s c) 189,559 d) 110,982 2. What is the total interest payment paid over the 3-year period? a) $45,000 b) $15,000 c) $41,514 d) $15,123 e) None of the above 3. How much principal is paid in the 3-year period (pretax)? $45,000 b) $189,554 a) c) $60,441 d) $33,965 e) None of the above 4. What is the loan balance at the end of 3 years? a) $231,035 b) $210,872 c) $189,559 d) $250,000 e) $101,894 Question 5-7 If a property sold for $320,000 and the following capitalization rates were used, what was the net operating income per month for each question (5-7): Assume: within $100 of answer!) Rounding! No pennies please! And 5. 4% cap? a) $12,800 b) $6,400 c) $1,066 d) $8,000 e) None of the above 6.6% cap? a) $1,600 b) $53,334 c) $19,200Explanation / Answer
1) Loan payment per year = loan amount*loan constant=250,000*.13586=33,965
( loan payment is the same each year)
total loan payments over 3 years=33965 * 3=101,895
2) loan payment= interest + principal
interest payment each year = loan outstanding at the beginnning of year*interest rate
interest for year 1 =250,000*6%=15,000
principal payment for year 1= loan payment for year 1- interest payment for year 1
= 33965-15000=18,965
loan outstanding at the end of year 1( beginning of year 2)= loan amount - principal paid in year 1
=250,000-18965=231,035
interest payment for year 2= loan o/s in beginning of year 2* interest rate=231,035*0.06
=13862.10~13,862
principal payment for year 2= loan payment- interest paid for 2nd year
= 33965-13862 = 20,103
loan o/s at the end of year 2 ( beginning of year 3) = 231,035 - 20,103 = 210,932
interest for year 3 = loan amount at the beginning of year 3 * interest rate
= 210,932 * 0.06 =12,655.92 ~ 12,656
principal for year 3 = 33965-12656 = 21,309
loan o/s at the end of year 3 = 210,932 - 21,309 = 189,623
TOTAL INTEREST PAYMENT PAID OVER 3 YEAR PERIOD= INTEREST1 + INTEREST 2 + INTEREST
= 15,000+13862+12656
= 41,518
3) PRINCIPAL PAID IN 3 YEARS = 18,965 + 20,103 + 21,309
= 60,377
4) LOAN BALANCE AT THE END OF 3 YEARS = 189,623
year loan payment interest principal balance 1 250,000 33,965 15,000 18,965 231,035 2 231,035 33,965 13,862 20,103 210,932 3 210,932 33,965 12,656 21,309 189,623 101,895 41,518 60,377