what are repayment schedules for each of the following five-year, 10% $10,000 te

Question

what are repayment schedules for each of the following five-year, 10% $10,000 term loans?

A.) Equal annual payments that amortize (retire) the principal and pay the interest owed on the declining balance.

B.) Equal annual principal repayment, with interest calculated on the remaining balance owed.

C.) No principal repayment until after 5 years, with interest paid annully on the balance owed.

D,) $1,000 annual principal repayment, with the balance paid at the end of five years and annual interest paid on the balance owed.

Thank you for your help, show all detailed work. Thanks again:-)

Explanation / Answer

Hi

Plase see below

2. 5 yr/ 10%/ $10,000 Loan

a. equal annual payments that amortize (retire) the principal and pay the interest owed on the declining balance

Year Payment Balance Interest
0 $- $10,000.00 $1,000.00
1 $2,637.97 $8,362.03 $836.20
2 $2,637.97 $6,560.25 $656.03
3 $2,637.97 $4,578.30 $457.83
4 $2,637.97 $2,398.16 $239.82
5 $2,637.97 $0.00 $0.00
Total $13,189.87 $3,189.87

Equal Annual Payment: $2,637.09 ((.1+(.1/(((1+.1)^5)-1)))*10000)

b. equal annual principal repayment, with interest calculated on the remaining balance owed

-compound and add interest from initial loan
-subtract principle payment (10000/5 = $2000)
-add compounded interest to remaining balance
-repeat until all principle is paid
-what remains is interest.


Year Payment Balance Interest
0 $- $10,000.00 $1,000.00
1 $2,000.00 $9,000.00 $900.00
2 $2,000.00 $7,900.00 $790.00
3 $2,000.00 $6,690.00 $669.00
4 $2,000.00 $5,359.00 $535.90
5 $2,000.00 $3,894.90
Total $10,000.00

Remaining interest = $3,894.90

c. no principal repayment until after five years, with interest paid annually on the balance owned

-compound and add interest from initial loan
-interest compounded is paid-
-repeat until year 5

Year Payment Remaining Interest
0 $- $10,000.00 $1,000.00
1 $1,000.00 $10,000.00 $1,000.00
2 $1,000.00 $10,000.00 $1,000.00
3 $1,000.00 $10,000.00 $1,000.00
4 $1,000.00 $10,000.00 $1,000.00
5 $1,000.00 $10,000.00
Total $5,000.00 $ 0.00 $5,000.00

d. $1,000 annual principal repayment, with the balance paid at the end of five years and annual interest paid on the balance owed

-compound interest
-Subtract payment from principle
-compound interest from remaining principle
-repeat to year 5


Year Payment Principle Interest Balance
0 $- $10,000.00 $1,000.00 $11,000.00
1 $1,000.00 $9,000.00 $900.00 $10,900.00
2 $1,000.00 $8,000.00 $800.00 $10,700.00
3 $1,000.00 $7,000.00 $700.00 $10,400.00
4 $1,000.00 $6,000.00 $600.00 $10,000.00
5 $1,000.00 $5,000.00 $500.00 $9,500.00
Total $5,000.00 $4,500.00 $9,500.00

Thank you

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