Question

Your firm just acquired a bank loan in the amount of $30,000 at 6% APR. Equal...


Your firm just acquired a bank loan in the amount of $30,000 at 6% APR. Equal payments are to be made annually at the end of each year for three years. Construct the amortization table.
Year#
Owed
Annual Payment
Principal Reduction
Interest
New Principal
1
$30,000.00
2
3
Total

Homework Answers

Answer #1

Loan Amortization Table

Year

Amount Owed

Annual Equal Payments

Interest at 6%

Principal Repayment

Ending Balance

1

$30,000.00

$11,223.29

$1,800.00

$9,423.29

$20,576.71

2

$20,576.71

$11,223.29

$1,234.60

$9,988.69

$10,588.01

3

$10,588.01

$11,223.29

$635.28

$10,588.01

$0

Annual Equal Payment

Interest Rate (r) = 6% per year

Number of Periods = 3 Years

Annual Equal Payment = [P x {r (1+r)n} ] / ( 1+r)n – 1

= [$30,000 x {0.06 x (1 + 0.06)3}] / (1 + 0.06)6 - 1

= [$30,000 x {0.06 x 1.191016}] / [1.191016 – 1]

= [$30,000 x 0.071461] / 0.1910160

= $11,223.29 per year

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