13. Creating an amortization schedule Aa Aa After Shipra got a job, the first th

Question

13. Creating an amortization schedule Aa Aa After Shipra got a job, the first thing she bought was a new car. She took out an amortized loan for $40,000-with no ($0) down payment. She agreed to pay off the loan by making annual payments for the next four years at the end of each year. Her bank is charging her an interest rate of 5% per year. Yesterday she called to ask that you help her compute the annual payments necessary to repay her loan Calculate the annual payment and complete the following loan amortization table Interest Paid Principal Paid Beginning Payment Ending Balance Year Amount $40,000.00 $0.02

Explanation / Answer

use PMT funciton in Excel to determine the payments

Year Beg Balance Total Pmt Interest Principal Paid End Balance 1 40,000 11,280.47 2,000.00 9,280.47 30,719.53 2 30,720 11,280.47 1,535.98 9,744.50 20,975.03 3 20,975 11,280.47 1,048.75 10,231.72 10,743.31 4 10,743 11,280.47 537.17 10,743.31 0.00

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