Question

Crab State Bank has offered you a $1,250,000 5-year loan at an interest rate of 10.25 percent, requiring equal annual end-of-year payments that include both principal and interest on the unpaid balance. Develop an amortization schedule for this loan. Round your answers to the nearest dollar. End of Year Payment Interest (10.25%) Principal Reduction Balance Remaining 0 $1,250,000 1 $ $ $ 2 3 4 5

can you explain the steps please.

Answer #1

First of all lets find installment amount

Installment = Loan amount/PVIFA(r%,n)

here r = rate of interest = 10.25%

n = no. of years = 5 years

PVIF(YTM%,n)

PVIFA(YTM%,n) = [1-(1/(1+r)^n / r ]

PVIFA(15%,10) = [1-(1/(1+10.25%)^5 / 10.25%]

=[1-(1/(1+0.1025)^5 / 0.1025]

=[1-(1/(1.1025)^5 / 0.1025]

=[1-0.6139 / 0.1025]

=0.3861/0.1025

=3.7667

Thus Installment = 1250000/3.7667

= 3,31,855.47$

Amortization schedule

Towards | |||||

Year | Opening balance | Installment | Interest @ 10.25% | Principal | Closing balance |

A | B | C = A x 10.25% | D = B-C | E = A- D | |

1 | 1250000 | 331855 | 128125 | 203730 | 1046270 |

2 | 1046270 | 331855 | 107243 | 224613 | 821657 |

3 | 821657 | 331855 | 84220 | 247636 | 574021 |

4 | 574021 | 331855 | 58837 | 273018 | 301003 |

5 | 301003 | 331855 | 30853 | 301003 | 0 |

Crab State Bank has offered you a $1,250,000 5-year loan at an
interest rate of 10.25 percent, requiring equal annual end-of-year
payments that include both principal and interest on the unpaid
balance. Develop an amortization schedule for this loan. Round your
answers to the nearest dollar.
End of Year Payment Interest (10.25%) Principal Reduction
Balance Remaining
0 $1,250,000
1 $ $ $
2
3
4
5

You receive a 4-year $11,000 negative amortization loan with an
interest rate of 5% p.a., to be repaid in four annual installments.
The loan requires that you make total payments of $300 at t = 1,
$400 at t = 2, and $300 at t = 3, with the remaining loan balance
paid at maturity. What is the total payment amount at t = 4,
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Prepare an amortization schedule for a three-year loan of
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(Enter rounded answers as directed, but do
not use rounded numbers in intermediate calculations.
Leave no cells blank. You must enter '0'
for the answer to grade correctly.)
Year
Beginning
Balance
Total
Payment
Interest
Payment
Principal
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wherever required.)
Year
Beginning Balance
Total Payment
Interest Payment
Principal Payment
Ending Balance...

1.
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Do an amortization schedule for the loan and answer the following
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Please create a Variable Interest Rate Loan Amortization
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Prepare an amortization schedule for a seven year loan of
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Year Beg.
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Develop an amortization schedule for the loan described. (Round
your answers to the nearest cent.)
$35,000 for 1 year at 12% compounded quarterly
Period
Payment
Interest
Balance
Reduction
Unpaid
Balance
$35,000
1
$
$
$
$
2
$
$
$
$
3
$
$
$
$
4
$
$
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Develop an amortization schedule for the loan described. (Round
your answers to the nearest cent.)
$35,000 for 1 year at 12% compounded quarterly
Period
Payment
Interest
Balance
Reduction
Unpaid
Balance
$35,000
1
$
$
$
$
2
$
$
$
$
3
$
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