AMORTIZATION SCHEDULE a. Complete an amortization schedule for a $34,000 loan to

Question

AMORTIZATION SCHEDULE a. Complete an amortization schedule for a $34,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 10% compounded annually. Round all answers to the nearest cent. Beginning Repayment Ending Interest ofPrincipal Balance Balance avment Interest Payment b. What percentage of the payment represents interest and what percentage represents principal for each of the three years? Round all answers to two decimal places. 96 Interest % Principal Year 1: Year 2: Year 3: C. Why do these percentages change over time? I. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or

Explanation / Answer

Ans C) Percentages change over time becasue even though the total payment is constant the amount of interest paid each year is declining.

Loan Amount 34000 Interest 10% Years 3 Payments $13,671.90 Year Beginning balance Payment Interest Repayment of principal Balance 1 $34,000 $13,671.90 $3,400.00 $10,271.90 $23,728.10 2 $23,728.10 $13,671.90 $2,372.81 $11,299.09 $12,429.00 3 $12,429.00 $13,671.90 $1,242.90 $12,429.00 $0.00 Year % interest % principal 1 24.87% 75.13% 2 17.36% 82.64% 3 9.09% 90.91%

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