Question

Anderson Small Appliance Company is negotiating a commercial loan of $480,000 with two banks. Bank A has offered to loan the money at 8% with level principal payments and the interest at the end of each of three years. Bank B is suggesting a loan at 8% in which ASAC would make three level total payments that are the same amount, one at the end of each year. Do an amortization schedule for each loan.

Answer 1

Bank A op 8% Bank A Interest Year Opening Interest Payment Principal closing 1 $4,80,000.00 $38,400.00 $1,98,400.00 $1,60,000.00 $3,20,000.00 2 $3,20,000.00 $25,600.00 $1,85,600.00 $1,60,000.00 $1,60,000.00 3 $1,60,000.00 $12,800.00 $1,72,800.00 $1,60,000.00 $0.00 Bank B PMT $1,86,256.09 Year Opening Interest Payment Principal closing 1 $4,80,000.00 $38,400.00 $1,86,256.09 $1,47,856.09 $3,32,143.91 2 $3,32,143.91 $26,571.51 $1,86,256.09 $1,59,684.57 $1,72,459.34 3 $1,72,459.34 $13,796.75 $1,86,256.09 $1,72,459.34 $0.00

А B C D E F G H I J K L M N O -NMON Bank A Interest 0.08 Year Opening Interest Payment Principal Closing 1 480000 1=C4*$E$2 =+D4+F4 =C4/3 =C4-F4 =+B4+1 =G4 =C5*$E$2 =+D5+F5 =F4 =C5-F5 =+B5+1 =G5 1 =C6*$E$2 =+DO+F6 F5 =C6-F6 1 Bank B PMT --PMT(E2,3,4) Year Opening Interest Payment 4 80000 =J4*$E$2 =L2 =+14+1 =N4 =J5*$E$2 =L4 =+15+1 =N5 =J6*$E$2 =L5 Principal Closing =+L4-K4 =J4-M4 =+L5-K5 =25-M5 =+L6-K6 =J6-M6