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Set up an amortization schedule for a $30,000 loan to be repaid in equal installments at...

Set up an amortization schedule for a $30,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 10% compounded annually. How much repayment of principal was included in the first payment?

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Answer #1

After 3 year the total payment will be =

Future Value = $30,000 ( 1 + 0.10)3

Future Value = $30,000 * 1.331

Future Value = $39,930

The total Payment made after 3 years amounting to $39,930.

In first Year Total payment made including Interest = $39,930 /PVAF(10%,3) = $39,930 /2.4868 = 16056.779

Amortisation Schedule
Year Opening Balance Installment Principal Interest Closing Balance
1 39930.00 16059.78 12066.78 3993.00 27863.22
2 27863.22 16059.78 13273.46 2786.32 14589.76
3 14589.76 16059.78 14600.80 1458.98 0.00
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