a. Complete an amortization schedule for a $44,000 loan to be repald in equal installments at the end of each of the next three years. The interest rate is 10% compounded annually. Round all answers to the nearest cent. Beginning Repayment Ending Year Balance Рayment Interest of Principal Balance %24 %24 %24 2. %24 %24 %24 %24 3 %24 %24 %24 b. What percentage of the payment represents interest and what percentage represents principal for each of the three years? Round all answers to two decimal places. % Interest % Principal Year 1: % Year 2: Year 3: c. 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 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 $44,000 loan to be repald in equal installments at the end of each of the next three years. The interest rate is 10% compounded annually. Round all answers to the nearest cent. Beginning Repayment Ending Year Balance Рayment Interest of Principal Balance %24 %24 %24 2. %24 %24 %24 %24 3 %24 %24 %24 b. What percentage of the payment represents interest and what percentage represents principal for each of the three years? Round all answers to two decimal places. % Interest % Principal Year 1: % Year 2: Year 3: c. 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 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.
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
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tivity- Amortization schedule
a. Complete an amortization schedule for a $44,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 10% compounded annually.
Round all answers to the nearest cent.
Beginning
Repayment
Ending
Year
Balance
Раyment
Interest
of Principal
Balance
1
24
%24
2.
24
$4
%24
24
24
%24
24
b. What percentage of the payment represents interest and what percentage represents principal for each of the three years? Round all answers to two decimal places.
% Interest
% Principal
Year 1:
Year 2:
Year 3:
%
c. 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
balance increases.
Theee
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.
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