Question

a. Complete an amortization schedule for a $16,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 11% compounded annually. Round all answers to the nearest cent. Beginning Ending Repayment of Principal Year Balance Payment Interest Balance 4 श्री श्री 2 $ श्री 4 श्री 3 $ श्री 4 b. What percentage of the payment represents interest and what percentage represents principal for each of the three years? Round all answers to two decimal places. % Interest % Principal Year 1: Year 2: Year 3: c. Why do these percentages change over time? I. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines. II. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance declines. III. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance increases. IV. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance increases. V. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.

Answer 1

solution; Year Beginning balance Payment** interest c=a* 11% کا انما با **calculation of annual payment: Loan amount /PVIFA(11%,3)* annual payment 16,000.00 6,547.41 11,212.596,547.41 5,898.57 6,547.41 Repayment of principal d=b-c 4,787.41 5,314.02 5,898.57 1,760.00 1,233.38 648.84 Ending balance e-a-d 11,212.59 5,898.57 0.00 16,000 2.44371 6,547.41 *PVIFA(11%,3) (1-(1.114-3/0.11 2.44371 formula (1-(1+r)^-n)/ b) Year Payment** interest - ab 6,547.41 1,760.00 6,547.41 1,233.38 E 3 6,547.41 648.84 Repayment of principal % interest d=b/a 4,787.41 5,314.02 5,898.57 26.88% 18.84% 9.91% % principal e=c/a 73.12% 81.16% 90.09% 1. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines. + Sheet64 Sheet65 Sheet66 Sheet67 Sheet68 Sheet69 Sheet70 Sheet71 Sheet72 Sheet73 > ENG UK TO 20:11 03/03/2020