Question

Prepare an amortization schedule for a five-year loan of $71,500. The interest rate is 7 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.)

Answer 1

Answer:

Explanation:

Let's recall the formula that will be used for calculations

The annual payment on the loan=Present value of a loan/PVIFA

r=7%; n=5

Annual payment on the loan=71500/4.100197=17438.19

OR we can use the financial calculator and input the following data:

PV = 71500; r=7%; n=5; PMT=?

PMT=17438.19

Amortization schedule:

YEAR  Beg. balance    Total PMT    Interest PMT   Principal PMT   End. Bal.

1           71500                 17438.19      5005                 12433.19          59066.81

2          59066.81           17438.19       4134.68             13303.51          45763.3

3          45763.30           17438.19       3203.43            14234.76         31528.54

4          31528.54            17438.19       2207                 15231.19           16297.35

5          16297.35             17438.19      1140.81              16297.38          0

*5005 = 71500 ×0.07

12433.19=17438.19-5005 and so on...