Question

Prepare an amortization schedule for a five-year loan of $39,000. The interest rate is 9% per year, and the loan calls for equal annual payments. (Do not round intermediate calculations. Enter all amount as positive value. Round the final answers to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required.) Year Beginning Balance Total Payment Interest Payment Principal Payment Ending Balance 1 $ $ $ $ $ 2 3 4 5 How much interest is paid in the third year? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Interest paid $ How much total interest is paid over the life of the loan? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Total interest $

Answer 1

Calculate monthly payment under loan
Monthly payment	Loan amount/(1-(1+r)^-n)/r
r is interest rate and n is number of payment
Monthly payment	39000/((1-(1.09^-5))/0.09)
Monthly payment	39000/3.889651
Monthly payment	$10,026.61
Prepare amortization table for loan
Period	Monthly payment	Interest	Principal	Balance
				$39,000.00
1	$10,026.61	$3,510.00	$6,516.61	$32,483.39
2	$10,026.61	$2,923.51	$7,103.10	$25,380.29
3	$10,026.61	$2,284.23	$7,742.38	$17,637.91
4	$10,026.61	$1,587.41	$8,439.19	$9,198.72
5	$10,026.61	$827.88	$9,198.72	$0.00
		$11,133.03
The interest paid in third year is $2,284.23
The total interest paid over life of loan is $11,133.03