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

Answer 1

Amortization Schedule

Loan amount	$1,250,000
Loan term (in years)	5
Interest rate	10.25%
End of year payment	$331,855
Year	End of year payment	Interest	Principal reduction	Balance Remaining
0				$1,250,000
1	$331,855	$128,125	$203,730	$1,046,270
2	$331,855	$107,243	$224,613	$821,657
3	$331,855	$84,220	$247,636	$574,021
4	$331,855	$58,837	$273,018	$301,003
5	$331,855	$30,853	$301,003	$0
Total	$1,659,277	$409,277	$1,250,000

Calculations