a. Complete an amortization schedule for a $19,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 6% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent Beginning Balance Payment Year 1 $ Repayment of Principal Remaining Balance Interest $ 2 3 b. What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Do not round intermediate calculations. Round your answers to two decimal places. % Interest % Principal Year 1: % Year 2: % Year 3: % Why do these percentages change over time? 1. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines. II. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance declines. III. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance increases. IV. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance increases. V. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.
a. Complete an amortization schedule for a $19,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 6% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent Beginning Balance Payment Year 1 $ Repayment of Principal Remaining Balance Interest $ 2 3 b. What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Do not round intermediate calculations. Round your answers to two decimal places. % Interest % Principal Year 1: % Year 2: % Year 3: % Why do these percentages change over time? 1. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines. II. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance declines. III. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance increases. IV. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance increases. V. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:a. Complete an amortization schedule for a $19,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 6% compounded
annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent
Beginning
Balance
Year
Payment
Repayment
of Principal
Remaining
Balance
Interest
1
$
2
3
b. What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Do not round intermediate calculations. Round your
answers to two decimal places.
% Interest
% Principal
Year 1:
%
%
Year 2:
%
%
Year 3:
%
%
Why do these percentages change over time?
1. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or
outstanding balance declines.
II. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or
outstanding balance declines.
III. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or
outstanding balance increases.
IV. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or
outstanding balance increases.
V. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.
-Select
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