Question

Prepare an amortization schedule for the first three months on a loan of $87,000 at 6% for 20 years.

Answer 1

see attached

Explanation:

An amortization schedule is conveniently prepared using a spreadsheet. It has the formula built in for computing the payment value.

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The amount of the payment going to interest is the product of the outstanding balance and the monthly interest rate (=6%/12). In the attached, the amount of interest due is rounded to cents. The remaining amount of the payment reduces the outstanding balance.

The attachment shows the payment calculation and the amortization schedule for the first 5 payments.