Homework SoursePrepare an amortization schedule for a threeyear loan of 750
Prepare an amortization schedule for a three-year loan of $75,000. The interest rate is 8 percent per year, and the loan agreement calls for a principal reduction of $25,000 every year. How much total interest is paid over the life of the loan? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Leave no cells blank. You must enter \'0\' for the answer to grade correctly.)
Year
Beginning
Balance
Total
Payment
Interest
Payment
Principal
Payment
Ending
Balance
1
$
$
$
$
$
2
3
| Prepare an amortization schedule for a three-year loan of $75,000. The interest rate is 8 percent per year, and the loan agreement calls for a principal reduction of $25,000 every year. How much total interest is paid over the life of the loan? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Leave no cells blank. You must enter \'0\' for the answer to grade correctly.)
|
Solution
a
b=c + d
c=a*8%
d
e=a-d
Year
Beginning balance
Total Payment
Interest Payment
Principal Payment
Ending balance
1
75000
31000
6000
25000
50000
2
50000
29000
4000
25000
25000
3
25000
27000
2000
25000
0
Total
$12000
$75000
Total Interest = $12000
For Understanding the calculation, year 1 calculation shown below:
Calculation of year 1:
Step 1: Calculate Interest = Opening Balance* Interest rate = $75000*8% = $6000
Step 2: Total Payment = Principal payment+ Interest payment
Principal payment = 25000 [given in question]
Interest payment = 6000 [step1 calculation]
Total Payment = 25000 + 6000 = 31000
Step3: Ending Balance = Opening Balance-Principal Payment = 75000-25000=50000
| a | b=c + d | c=a*8% | d | e=a-d | |
| Year | Beginning balance | Total Payment | Interest Payment | Principal Payment | Ending balance |
| 1 | 75000 | 31000 | 6000 | 25000 | 50000 |
| 2 | 50000 | 29000 | 4000 | 25000 | 25000 |
| 3 | 25000 | 27000 | 2000 | 25000 | 0 |
| Total | $12000 | $75000 |
