Complete an amortization schedule for a $48,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 11% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning RepaymentEndingYearBalancePaymentInterestof PrincipalBalance1$ $ $ $ $ 2 3 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% PrincipalYear 1: % %Year 2: % %Year 3: % %Why do these percentages change over time?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.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.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.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.These percentages do not change over time; interest and principal are each a constant percentage of the total payment.

Using excel PMT function Amortization schedule is as under-

Answered: Complete an amortization schedule for a…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 12E

See similar textbooks

Related questions

Question

Complete an amortization schedule for a $48,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 11% 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	$	$	$	$	$
2
3

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?
1. 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.
2. 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.
3. 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.
4. 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.
5. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions