Question

Ian loaned his friend $20,000 to start a new business. he considers this loan to be an investment and therefore requires his friend to pay him an interest rate of 8% on the loan. He also expects his friend to pay back the loan over the next 4 years by making annual payments at the end of each year. Ian texted and asked that you help him calculate the annual payments that he should expect to receive so that he can recover his inital inestment and ean the areeed-upon 8% on his investment. calculate the annual payment and complete the following amortization schedule:
Year Beginning amount Payment Interest paid Princpal paid ending balance
1 $20,000
2
3
4

Answer 1

Answer:

                beginning        scheduled       principal      interest      ending

year        balance            payment           paid             paid           balance

 1        20,000.00         5,083.61       4,950.28      133.33      15,049.72

 2        15,049.72         5,083.61       4,983.28         100.33       10,066.44

 3        10,066.44         5,083.61       5,016.50           67.11         5,049.94

 4         5,049.94         5,083.61       5,049.94        33.67                0.00