Question

Complete an amortization schedule for a $49,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 12% compounded annually. Round all answers to the nearest cent.

Answer 1

Amount Borrowed = $49,000
Annual Interest Rate = 12%
Number of Payments = 3

Let Annual Payment be $x

$49,000 = $x/1.12 + $x/1.12^2 + $x/1.12^3
$49,000 = $x * (1 - (1/1.12)^3) / 0.12
$49,000 = $x * 2.401831
$x = $20,401.10

Annual Payment = $20,401.10