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a. Complete an amortization schedule for a $21,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 7% compounded annually. Round all answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 1 $ $ $ $ 2 $ $4 2$ 24 $ 3 $ 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:

a. Complete an amortization schedule for a $21,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 7% compounded annually. Round all answers to the nearest cent. Beginning Repayment Ending Year Balance Payment Interest of Principal Balance 1 $ $ $ $ 2 $ $4 2$ 24 $ 3 $ 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:

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 11P
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a. Complete an amortization schedule for a $21,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 7% compounded annually. Round all answers to the nearest cent. Beginning Repayment Ending Year Balance Рayment Interest of Principal Balance 1 $ $ $ $ $ $ $ $ $ 3 2$ $ $ $ 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: % % %24 %24
Transcribed Image Text:a. Complete an amortization schedule for a $21,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 7% compounded annually. Round all answers to the nearest cent. Beginning Repayment Ending Year Balance Рayment Interest of Principal Balance 1 $ $ $ $ $ $ $ $ $ 3 2$ $ $ $ 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: % % %24 %24
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.
Transcribed Image Text: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.
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