Question

Prepare an amortization schedule for a five-year loan of $47,000. The interest rate is 7% per year, and the loan calls for equal annual payments. (Do not round intermediate calculations. Enter all amounts as positive value. Round the final answers to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required.)

Year	Beginning Balance	Total Payment	Interest Payment	Principal Payment	Ending Balance
1	$	$	$	$	$
2
3
4
5

How much interest is paid in the third year? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Interest paid           $

How much total interest is paid over the life of the loan? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Total interest           $

Answer 1

Solution 1:

Annual payment amount = $47,000 / Cumulative PV factor at 7% for 5 periods

= $47,000 / 4.100197 = $11,462.86

Year	Beginning Balance	Total Payment	Interest Payment	Principal Payment	Ending Balance
1	$47,000.00	$11,462.86	$3,290.00	$8,172.86	$38,827.14
2	$38,827.14	$11,462.86	$2,717.90	$8,744.96	$30,082.18
3	$30,082.18	$11,462.86	$2,105.75	$9,357.11	$20,725.07
4	$20,725.07	$11,462.86	$1,450.76	$10,012.10	$10,712.97
5	$10,712.97	$11,462.86	$749.89	$10,712.97	$0.00
Total			$10,314.30

Solution 2:

interest is paid in the third year = $2,105.75

Solution 3:

Total interest is paid over the life of the loan = $10,314.30