Question

14. Loan amortization and capital recovery After Shipra got a job, the first thing she bought was a new car. She took out an amortized loan for $20,000—with no ($0) down payment. She agreed to pay off the loan by making annual payments for the next four years at the end of each year. Her bank is charging her an interest rate of 6% per year. Yesterday, she called to ask that you help her compute the annual payments necessary to repay her loan. Calculate the annual payment and complete the following loan amortization table: Payment Interest Paid Principal Paid Ending Balance Year Beginning Amount $20,000.00 $0.00

Answer 1

ТА | в Year Beginning Amount Payment 1 20,000 $ 2 $ 15,428.17 $ 3 $ 10,582.03 $ 4 $ 5,445.12 $ 5,771.83 5,771.83 5,771. 83 5,771.83 D Ε F Interest Paid Principal Paid Ending Balance 1200 $ 4,571.83$ 15,428.17 925.6902092 $ 4,846.14 $ 10,582.03 6 34.9218309 $ 5,136.91 $ 5,445.12 326.7073499 $ 5,445.12 $

Calculations

А - F 882 8831 884 =A883+1 885 =A884+1 886 =A885+1 Year Beginning Amount 20000 =F883 =F884 =F885 Payment =PMT(6%,$A$886,-$B$883) =PMT(6%, $A$886,-$B$883) =PMT(6%, $A$886,-$B$883) =PMT(6%, $A$886,-$B$883) Interest Paid =6%*B883 =6%*B884 =6%*B885 =6%*B886 Principal Paid =C883-D883 =C884-D884 =C885-D885 =C886-D886 Ending Balance =B883-E883 =B884-E884 =B885-E885