Question


Your company is planning to borrow $0.75 million on a 5-year, 14%, annual payment, fully amortized term loan.
The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.
What fraction of the payment made at the end of the second year will represent repayment of principal? Do not round intermediate calculations. Round your answer to two decimal places.
________ %

screenshot of spreadsheet attached just for reference. I need the yellow highlighted percentage above

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Answer #1

The answer is 0.592.

Loan Payment is calculated using PMT function in excel

Interest Payment= 14%* Beginning Balance

Principal Paid= Payment- Interest Payment

Ending Balance= Beginning Balance+Interest - Payment

Loan Amount 750000
Term Year 5
Annual Coupon Rate 14%
Loan Payment $218,462.66
Beginning Balance Payment Interest Principal Principal Ending Balance
750000 $218,462.66 105000 $113,462.66 $636,537.34
$636,537.34 $218,462.66 $89,115.23 $129,347.43 $507,189.91
$507,189.91 $218,462.66 $71,006.59 $147,456.07 $359,733.84
$359,733.84 $218,462.66 $50,362.74 $168,099.92 $191,633.91
$191,633.91 $218,462.66 $26,828.75 $191,633.91 $0.00
Fraction 0.5920802774
In % 59.20802774
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