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23 January, 09:00

Prepare an amortization schedule for a three-year loan of $84,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan

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  1. 23 January, 12:57
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    Amortization Schedule

    Year Payment Principal Interest Balance

    1 35,560.00 28,000.00 7,560.00 56,000.00

    2 33,040.00 28,000.00 5,040.00 28,000.00

    3 30,520.00 28,000.00 2,520.00 0.00

    Explanation:

    Loan of $84,000.00 at 9% interest with 3 annual payments at Constant Principal Payments of $28000.

    Total Payments: $99,120.00 Total Interest: $15,120.00

    The Interest payment and principal amount is gradually decreased with principal value of the loan. The principal value at the end of the year 3 is zero.
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