a. Complete an amortization schedule for a $26,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 9% compounded annually. If amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Year 1 2 3 $ Beginning Balance % Interest $ % Principal Payment % % % % Year 1: % Year 2: Year 3: % Why do these percentages change over time? Interest $ 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. Repayment of Principal $ Remaining Balance I. 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
a. Complete an amortization schedule for a $26,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 9% compounded annually. If amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Year 1 2 3 $ Beginning Balance % Interest $ % Principal Payment % % % % Year 1: % Year 2: Year 3: % Why do these percentages change over time? Interest $ 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. Repayment of Principal $ Remaining Balance I. 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
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
100%
Transcribed Image Text:a. Complete an amortization schedule for a $26,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 9% compounded annually. If an
amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent.
Year
1
2
3
Beginning
Balance
% Interest
Payment
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.
% Principal
%
%
%
Year 1:
%
Year 2:
%
Year 3:
%
Why do these percentages change over time?
Interest
-Select- ✓
Repayment
of Principal
Remaining
Balance
I. 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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education