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. |

b. |
How much interest is paid in the third year? |

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

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