Question 7 (of 7) 10.00 points Problem 5-55 Amortization with Equal Payments [LO

Question

Question 7 (of 7) 10.00 points Problem 5-55 Amortization with Equal Payments [LO 3] Prepare an amortization schedule for a three-year loan of $81,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. Leave no cells blank. Enter '0' where necessary. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32 Beginning Balance Total Payment Ending Interest Payment Principal Payment Year 2 Total interest References eBook & Resources Worksheet Difficulty: 2 Intermediate Problem 5-55 Amortization with Equal Payments [LO 3] Learning Objective: 05-03 Describe how loans are amortized or paid off

Explanation / Answer

Calculation of annual payments = 81000/Pvf @8% for 3 yrs

=81000/2.58 =31395.35

Year Beginning balance Total payment interest payment Principal payment Ending balance 1.00 81000.00 31395.35 6480.00 24915.35 56084.65 2.00 56084.65 31395.35 4486.77 26908.58 29176.07 3.00 29176.07 31395.35 2334.09 29176.07 0.00

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