Homework Answers
Annual payment consists of interest and principal portions.
For year 1,
Interest amount = 27000 *9% = 2430
Principal part = 8334.05 -2430 = 5904.05
For year 2,
Interest amount = (27000 - 5904.05) *9% = 1898.64
Principal part = 8334.05 -1898.64= 6435.41
For year 3
Interest amount = (27000 - 5904.05 - 6435.41) *9% = 1319.45
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