Question

Prepare an amortization schedule for a three-year loan of $15,000. The interest rate is 10 percent per year and the loan calls for equal annual end-of-year payments (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16). Leave no cells blank. You must enter '0' for the answer to grade correctly) Beginning Balance Total Interest Principal Payment Ending Balance Year Payment Payment 1 S 2 3

Answer 1

Step-1:Calculation of annual payment
Annual payment	=	Loan amount	/	Present value of annuity of 1
	=	$       15,000	/	2.48685199
	=	$    6,031.72
Working:
Present value of annuity of 1	=	(1-(1+i)^-n)/i		Where,
	=	(1-(1+0.10)^-3)/0.10		i	10%
	=	2.48685199		n	3
Step-2:Preparation of amortization Schedule
Year	Beginning balance	Total payment	Interest Payment	Principal Payment	Ending Balance
	a	b	c=a*10%	d=b-c	e=a-d
1	$ 15,000.00	$    6,031.72	$ 1,500.00	$   4,531.72	$ 10,468.28
2	$ 10,468.28	$    6,031.72	$ 1,046.83	$   4,984.89	$   5,483.38
3	$   5,483.38	$    6,031.72	$     548.34	$   5,483.38	$            0.00
Total		$ 18,095.17	$ 3,095.17	$ 15,000.00