Hello, I need help answering this question below. Question 10 (of 10) value 0.50

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Hello,

I need help answering this question below.

Question 10 (of 10) value 0.50 points Problem 4-51 Amortization with Equal Payments Prepare an amortization schedule for a five-year loan of $62,000. The interest rate is 7 percent per year and the loan calls for equal annual payments. (Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).) Beginning Balance Total Payment Interest Payment Principal Payment Ending Balance Year 2 4 The interest rate is 7 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).) Total interest paid References eBook & Resources

Explanation / Answer

First we need to calculate EMI

If the loan amount is P, rate on interest (monthly is r, and loan term is n the EMI will be

EMI = P*r[(1 +r)^n]/ [(1+ r)^n- 1]

Where,

              Loan amount (P) = $62000

                Time (n) = 5 Period

               Interest rate [r] = 7% /Period

Let's put all the values in the formula to calculate EMI

EMI = 62000*0.07[(1 +0.07)^5]/ [(1+ 0.07)^5- 1]

        = 4340[(1.07)^5]/ [(1.07)^5- 1]

        = 4340[1.4025517307]/ [1.4025517307- 1]

        = 4340[1.4025517307]/ [0.4025517307]

        = 4340[3.48415277773392]

        = 15121.22

So EMI will be $15121.22

Now we will prepare Loan amortization schedule

Period

Loan balance

Periodic Payment (EMI)

Interest

Principle Payment

Remaining Loan

0

62000

1

62000.00

15121.22

4340.00

10781.22

51218.78

2

51218.78

15121.22

3585.31

11535.91

39682.87

3

39682.87

15121.22

2777.80

12343.42

27339.45

4

27339.45

15121.22

1913.76

13207.46

14131.98

5

14131.98

15121.22

989.24

14131.98

0.00

Total amount paid in 5 year = 12121.22* 5 = 75606.1

Interest amount = 75606.1 – 62000 = $13606.1

Period

Loan balance

Periodic Payment (EMI)

Interest

Principle Payment

Remaining Loan

0

62000

1

62000.00

15121.22

4340.00

10781.22

51218.78

2

51218.78

15121.22

3585.31

11535.91

39682.87

3

39682.87

15121.22

2777.80

12343.42

27339.45

4

27339.45

15121.22

1913.76

13207.46

14131.98

5

14131.98

15121.22

989.24

14131.98

0.00

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