Question

Question No. 2: Loan Amortization                                                                             (10marks)

You are borrowing a loan from Sohar Bank of 14832 OMR at a compound annual Interest rate

  of 1%. Question: Amortize the loan if annual payments are made for 5 years.          

Answer 1

first we have to compute annual payment
We have to use financial calculator to solve this
put in calculator-
PV		-14832
FV		0
I		1.0%
N		5
compute PMT	$3,055.98
Answer =		$3,055.98
Amortization table
	i	ii=i*1%	iii	iv=i+ii-iii
year	Beginning value	Interest	Payment	ending value
1	14832	148.32	$3,055.98	$11,924.34
2	$11,924.34	119.243377	$3,055.98	$8,987.60
3	$8,987.60	89.8759876	$3,055.98	$6,021.49
4	$6,021.49	60.2149244	$3,055.98	$3,025.73
5	$3,025.73	30.2572506	$3,055.98	$0.00