Question

Kiss Osei- Owusu is planning to build a hotel at a fost growing tourism area in central Region. She approachal her bankers for a loan of GH82oom. The bank agreed to give her the loan at the rate of 20% In equal and year end instalments. As the credit officer of the bank, you are required to: Determine the amount to be paid each year. Prepare an amortization Schedule for the loan.

Answer 1

We need to take an assumption on the Term of the loan. For calculation lets assume it to be 10 years.

a) The Annual installment to be paid is:

PMT(Interest Rate, Term, Value) = 47.7 M per year

b) Ammortization Schedule is below:

Year	Principal	Interest	Principal Amortized	Total Paid
0	200.0	40.0	7.7	47.7
1	192.3	38.5	9.2	47.7
2	183.1	36.6	11.1	47.7
3	172.0	34.4	13.3	47.7
4	158.7	31.7	16.0	47.7
5	142.7	28.5	19.2	47.7
6	123.5	24.7	23.0	47.7
7	100.5	20.1	27.6	47.7
8	73.0	14.6	33.1	47.7
9	39.8	8.0	39.7	47.7
10	0.0	0.0	47.7	47.7