Question

# Prepare an amortization schedule for a five-year loan of \$62,000. The interest rate is 7 percent...

 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.)

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