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a. Complete an amortization schedule for a $34,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 12% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 1 $4 34000 $ 14155.87 2$ 4080 24 10075.87 2$ 23924.13 23924.13 14155.87 2870.90 11284.97 12,639.17 3 12639.17 14155.87 1516.70 12639.17 .00 b. What percentage of the payment represents interest and what percentage represents principal for each of the three 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? 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 baļance 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. II

a. Complete an amortization schedule for a $34,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 12% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 1 $4 34000 $ 14155.87 2$ 4080 24 10075.87 2$ 23924.13 23924.13 14155.87 2870.90 11284.97 12,639.17 3 12639.17 14155.87 1516.70 12639.17 .00 b. What percentage of the payment represents interest and what percentage represents principal for each of the three 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? 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 baļance 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. II

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 12P
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a. Complete an amortization schedule for a $34,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 12% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 34000 14155.87 $4 4080 10075.87 2$ 23924.13 23924.13 14155.87 2870.90 11284.97 12,639.17 12639.17 14155.87 1516.70 12639.17 .00 b. What percentage of the payment represents interest and what percentage represents principal for each of the three 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? 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 baļance 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. II %24 %24 %24 2. 3.
Transcribed Image Text:a. Complete an amortization schedule for a $34,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 12% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 34000 14155.87 $4 4080 10075.87 2$ 23924.13 23924.13 14155.87 2870.90 11284.97 12,639.17 12639.17 14155.87 1516.70 12639.17 .00 b. What percentage of the payment represents interest and what percentage represents principal for each of the three 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? 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 baļance 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. II %24 %24 %24 2. 3.
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