I\'m not really sure how to calculate the values in each column. Calculations ar

Question

I'm not really sure how to calculate the values in each column. Calculations are appreciated over just simply answering the question.

Thank you!

Attempts: Average: 11. Creating an amortization schedule Aa Aa Ean loaned his friend $40,000 to start a new business. Ean considers this loan an investment and requires his friend to pay him an interest rate of 10%. Ean also expects his friend to pay back the loan in the next four years by making annual payments at the end of each year. You are helping Ean figure out the annual payments he should receive to recover the initial loan amount and to eam 10% on his investment. Calculate the annual payment and complete the following capital recovery schedule: Beginning Principal Paid Interest YearAmount Payment Paid Ending Balance 1 $40,000.00 $0.02

Explanation / Answer

The annual installment payment is obtained by solving the following equation

Loan amount = A X PVIFA n=4years , r = 10%

$ 40,000 = A X 3.170

A = $ 12,618.29

Year Beginning amount (1) Payment (2) Interest Paid(3)(0.10 X 1) Principal paid(4)(2-3) Ending balance(5) (1-4) 1 $40,000 $12,618.29 $4,000.0 $8,618.29 $31,381.71 2 $31,381.71 $12,618.29 $3,138.2 $9,480.12 $21,901.59 3 $21,901.59 $12,618.29 $2,190.2 $10,428.13 $11,473.46 4 $11,473.46 $12,618.29 $1,147.3 $11,470.94 $2.52

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