Question

Prepare an amortization schedule for a five-year loan of $67,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments.

Answer 1

Amortization schedule for a five-year loan

Year 1

Principle $11,195.19

Interest $6,030.00

Balance $55,804.81

Year 2

Principle $12,202.76

Interest $5,022.43

Balance $43,602.04

Year 3

Principle $13,301.01

Interest $3,924.18

Balance $30,301.03

Year 4

Principle $14,498.10

Interest $2,727.09

Balance $15,802.93

Year 5

Principle $15,802.93

Interest $1,422.26

Balance $0.00

Step-by-step explanation:

First Calculate the equal annual payments, Pmt of the loan as follows :

Pv = $67,000

n = 5

r = 9.00 %

p/yr = 1

Fv = $ 0

Pmt = ?

Using a financial calculator, the equal annual payments, Pmt is - $17,255.19

Then Construct the amortization schedule :

This can be obtained from a financial calculator as SHIFT AMORT