Question

You borrow $300,000 to buy a house over a 15-year term. The loan is structured as an amortized loan with annual payments and an interest rate of 10%. Find the information for the amortization schedule for years 1 and 2. Payment ($) Interest in Payment ($) Principal Repaid ($) Principal Owing at End of Year ($)

Answer #1

The required amortization table will be prepared as follows:

A | B | C | D | E | |

1 | Year | Payment | Interest in payment | Principal repaid | Principal owing at end of year |

2 | 0 | 300000.00 | |||

3 | 1 | 39442.13 | 30000.00 | 9442.13 | 290557.87 |

4 | 2 | 39442.13 | 29055.79 | 10386.35 | 280171.52 |

Answers for Year 1 are in yellow and answers for Year 2 are in green.

Note:

Above figures have been calculated in the following manner:

Year | Payment | Interest in payment | Principal repaid | Principal owing at end of year |

0 | 300000 | |||

1 | =PMT(10%,15,-300000,0,0) | =E2*10% | =B3-C3 | =E2-D3 |

2 | =PMT(10%,15,-300000,0,0) | =E3*10% | =B4-C4 | =E3-D4 |

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The amount of your annual payments will be
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An amortization table reports the amount of interest and
principal contained within each regularly scheduled payment used to
repay an amortized loan.
Example Amortization Schedule
Year
Beginning
Amount
Payment
Interest
Repayment of
Principal
Ending
Balance
1
2
3
Consider the amount of the interest payments included in each of
the payments of an amortized loan. Which of the following
statements regarding the pattern of the interest payments is
true?
The portion of the payment going toward interest is smaller in...

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