Question

Prepare an amortization schedule for a five-year loan of $62,000. The interest rate is 7 percent per year, and the loan calls for equal annual payments. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Leave no cells blank - be certain to enter "0" wherever required.)

  

b.	How much interest is paid in the third year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c.	How much total interest is paid over the life of the loan? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

  

Answer 1

Using excel formula

Period	Beginning Balance=62000	Total Payment =PMT(7%,5,-62000)	Interest payment=7%*Beginning Principal	Principal payment= PMT-Interest	Ending Balance= Beginning balance-Principal part of PMT
1	62000.00	15121.22	4340.00	10781.22	51218.78
2	51218.78	15121.22	3585.31	11535.91	39682.87
3	39682.87	15121.22	2777.80	12343.42	27339.45
4	27339.45	15121.22	1913.76	13207.46	14131.98
5	14131.98	15121.22	989.24	14131.98	0.00
		Total Interest	13606.12

b. Interest paid on 3rd year =2777.80

c. Total interest =13606.12