Crab State Bank has offered you a $500,000 5-year loan at an interest rate of 9.25...
Crab State Bank has offered you a $500,000 5-year loan at an interest rate of 9.25 percent, requiring equal annual end-of-year payments that include both principal and interest on the unpaid balance. Develop an amortization schedule for this loan. Round your answers to the nearest dollar. Do not round intermediate calculations.
| End of Year | Payment | Interest (9.25%) | Principal Reduction | Balance Remaining | |
| 0 | - | - | - | $500,000 | |
| 1 | $ | $ | $ | ||
| 2 | |||||
| 3 | |||||
| 4 | |||||
| 5 | |||||
Homework Answers
| Year | Opening Balance | Installment | Closing balance | ||
| total | Interest | capital | |||
| 1 | 500,000.00 | 129,381.14 | 46,250.00 | 83,131.14 | 416,868.86 |
| 2 | 416,868.86 | 129,381.14 | 38,560.37 | 90,820.77 | 326,048.09 |
| 3 | 326,048.09 | 129,381.14 | 30,159.45 | 99,221.69 | 226,826.40 |
| 4 | 226,826.40 | 129,381.14 | 20,981.44 | 108,399.70 | 118,426.70 |
| 5 | 118,426.70 | 129,381.17 | 10,954.47 | 118,426.70 | - |
| Calculation of installement amount | ||
| PV = | $ 500,000.00 | |
| n = | 5 years | |
| r = | 9.25% | |
| P = | ? | |
| PV = | P((1-(1+r)^-n)/r) | |
| 500,000.00 | = P((1-(1+.0925)^-5)/r) | |
| P = | 129,381.17 | |
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