Question

Prepare an amortization schedule for a five-year loan of $71,500. The interest rate is 7 percent per year, and the loan calls for equal annual payments. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Leave no cells blank - be certain to enter "0" wherever required.)

Answer 1

Step-by-step explanation:

Let's recall the formula that will be used for calculations

The annual payment on the loan=Present value of a loan/PVIFA

r=7%; n=5

Annual payment on the loan=71500/4.100197=17438.19

OR we can use the financial calculator and input the following data:

PV = 71500; r=7%; n=5; PMT=?

PMT=17438.19

Amortization schedule:

YEAR Beg. balance Total PMT Interest PMT Principal PMT End. Bal.

1 71500 17438.19 5005 12433.19 59066.81

2 59066.81 17438.19 4134.68 13303.51 45763.3

3 45763.30 17438.19 3203.43 14234.76 31528.54

4 31528.54 17438.19 2207 15231.19 16297.35

5 16297.35 17438.19 1140.81 16297.38 0

*5005 = 71500 ×0.07

12433.19=17438.19-5005 and so on...