Question

Prepare an amortization schedule for a three-year loan of $100,000. The interest rate is 8% per year, and the loan calls for equal annual payment How much is the annual total loan payment? How much interest is paid in the first year? How much total interest is paid over the life of the loan?

Answer 1

Loan amount	$ 1,00,000.00
PV factor	2.577096987
Annual instalment	$     38,803.35

Instalment no	Beginning loan balance	Interest on loan	Instalment	Principal repayment	Ending loan balance
1	$         1,00,000	$              8,000	$            38,803	$           30,803	$       69,197
2	$             69,197	$              5,536	$            38,803	$           33,268	$       35,929
3	$             35,929	$              2,874	$            38,803	$           35,929	$                  0

Solutions

How much is the annual total loan payment?

Answer---$38803

How much interest is paid in the first year?

Answer---$8000

How much total interest is paid over the life of the loan?

Answer---$16410

Answer 2

1. How much interest is paid on the third year? 2. How much total interest is paid over the life of the loan? 3. How much is the total amount paid?

   
   

2. Year	Outstanding Balance	Interest	Annual Amortization	Principal Paid
   1
   2
   3