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Spreadsheet in Excel
6.4 The production of polyamide from raw materials of plant origin, such as castor oil, requires 20% less fossil fuel than conventional production meth- ods. Darvon Chemicals borrowed $6 million to implement the process. If the interest rate on the loan is 10% per year for 10 years, what is the amount of interest for year 2?
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Answer #1

The annual payment on the loan is calculated using excel as follows

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The annual payment on the loan = $ 976,472.37

The amortization schedule on the loan is as below

The amount of interest for year 2 = $ 562,352.80

Year Beginning balance Annual payment Interest Principal Ending balance
1 $6,000,000 $976,472.37 $600,000.0 $376,472.37 $5,623,527.63
2 $5,623,527.63 $976,472.37 $562,352.8 $414,119.61 $5,209,408.02
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