Final answer:
i) The annual end-of-year payments for the loan are $5,000. ii) The loan amortization schedule shows that in the first year, the interest payment is $2,100 and the principal payment is $2,900. In the second year, the interest payment is $1,694 and the principal payment is $3,306. In the third year, the interest payment is $1,229 and the principal payment is $3,771.
Step-by-step explanation:
To calculate the annual end-of-year payments for the loan, we need to divide the total loan amount by the duration of the loan. In this case, the loan is $15,000 and it is repaid over three years. Therefore, the annual payments would be $15,000 divided by 3, which equals $5,000.
To prepare a loan amortization schedule, we need to calculate the interest and principal breakdown of each loan payment. In the first year, the interest would be $15,000 multiplied by 14%, which equals $2,100. The principal payment would be the annual payment of $5,000 minus the interest payment, which is $5,000 - $2,100 = $2,900.
In the second year, the interest would be $12,100 (remaining balance from the first year) multiplied by 14%, which equals $1,694. The principal payment would be $5,000 - $1,694 = $3,306. In the third year, the interest would be $8,794 (remaining balance from the second year) multiplied by 14%, which equals $1,229. The principal payment would be $5,000 - $1,229 = $3,771.