Question

Prepare an amortization schedule for a five-year loan of $34,000. The interest rate is 8% per year, and the loan calls for equal annual payments. (Do not round intermediate calculations. Enter all amount as positive value. Round the final answers to 2 decimal places. Leave no cells blank.be certain to enter "0" wherever required.) Beginning Total Interest Principal Ending Balance Payment Payment Balance 31000 2720 Payment Year 1 2 $ 3 4 5 How much interest is paid in the third year? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Interest paid How much total interest is paid over the life of the loan? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Total interest $

Answer 1

Year 1 2 3 4 5 Beginning Total Interest Principal Ending balance payment payment payment balance $34,000.00 $8,515.52 $2,720.00 $5,795.52 $28,204.48 $28.204.48 $8.515.52 $2.256.36 $6.259.16 $21.945.32 $21.945.32 $8.515.52 $1,755.63 $6.759.89 $15.185.43 $15.185.43 $8.515.52 $1,214.83 $7,300.69 $7.884.74 $7.884.74 $8.515.52 $630.78 $7.884.74 $0.00 $8.577.60 Interest paid in 3rd year = $1,755.63 Total interest $8,577.60

Excle formula used are

A D 1 Year 2 1 3 2 Beginning balance 34000 =F2 =F3 =F4 =F5 Total payment =B2*0.08*POWER(1.08,5)/(POWER(1.08,5)-1) =$C$2 =$C$2 =$C$2 =$C$2 Principal payment =C2-D2 =C3-D3 =C4-04 =C5-D5 =C6-D6 Interest payment =B2*0.08 =B3*0.08 =B4*0.08 =B5*0.08 =B6*0.08 =SUM(D2:06) Ending balance =B2-E2 =B3-E3 =B4-E4 =B5-E5 =B6-E6 4 3 4 5 65 7 8