Question

Prepare an amortization schedule for a five-year loan of $39,000. The interest rate is 9% per...

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 $

Homework Answers

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
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