. You want to buy a car, and a local bank will lend you $15,000. The loan will be fully amortized over 3 years and the nominal interest rate will be 9%. Construct an amortization table showing the fixed payment, the beginning year principal payment, the interest payment, and the ending principal balance for each year. Note that you will get a partial credit if you just show numbers
Yearly Loan Payment = Amount / Discount Factor or P = A / D
Number of Periodic Payments (n) = Payments per year times number of years= 3
Periodic Interest Rate (i) = Annual rate divided by number of payment periods= 9%
Discount Factor (D) = {[(1 + i) ^n] - 1} / [i(1 + i)^n]
Here, Discount factor= (((1+0.09)^3 -1)/(0.09(1+0.09)^3)
D= 2.53
Amount= 15000
Loan payment = 15000/2.53
= 5925.821
So the amortization table is as follow
Year |
Opening balance |
Interest |
Interest |
Principal= Annual payment - interest |
Principal Paid |
Total amount paid |
Balance= Opening balance- principal paid |
Closing Balance |
1 |
15,000.00 |
15000*9%= |
1,350.00 |
5925.82-1350= |
4,575.82 |
5,925.82 |
10,424.18 |
10,424.18 |
2 |
10,424.18 |
10424.18*9% |
938.18 |
5925.82-938.17= |
4,987.65 |
5,925.82 |
7,022.26 |
5,436.53 |
3 |
5,436.53 |
5436.53*9% |
489.29 |
5925.82-1350= |
5,436.53 |
5,925.82 |
2,624.27 |
0.00 |
. You want to buy a car, and a local bank will lend you $15,000. The...
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