Question

Open spread a. Come an amortecedor 40.000 ton to be done m mensahe end of each of the ents at the end of each of the three The Ending b. What percentage of the payment represent erest and what percentage represents principal for each of the three c. Why do these percentages change over time g 1. These percentages change were because even though the payment is constant the amount of interest and each year is e Il These percentages change over be even though the payment is constant the amount of interest and each year is Hl. These percentages change were even though the payment is constant the amount of more p each year ide IV. These percentages change overcome because even though the payment is constant the amount of more p each year is These percentages do not change menterend pricipal we each a constant percentage of the payment ter there r the

Answer 1

Using Excel to calculate

	A	B	C	D	E	F
1	Amortisation Schedule
2
3	Loan Amount to be repaid(PV)	40000
4	Interest Rate(r)	12%
5	Length of loan (in years)	3
6
7	a. Setting up Amortization table		Formula
8	Calculation of loan payment	$16,653.96	PMT(B4,B3,-B2)
9
10	Years	Beginning Balance	PMT =PMT(12%,3,-40000)	Interest part of PMT	Principal part of PMT= PMT-Interest	Ending Balance
11	1.00	40000.00	16653.96	4800.00	11853.96	28146.04
12	2.00	28146.04	16653.96	3377.52	13276.43	14869.61
13	3.00	14869.61	16653.96	1784.35	14869.61	0.00
14
15	B. Calculating % of Payment Representing Interest and Principal of Each Year
16		% Interest	% Principal	Check Total=100%
17	Year 1	28.82%	71.18%	100%
18	Year 2	20.28%	79.72%	100%
19	Year 3	10.71%	89.29%	100%

c. Option I is correct option