Consider a 4-year amortizing loan. You borrow $1,000 initially and repay it in four equal annual year-end

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Consider a 4-year amortizing loan. You borrow $1,000 initially and repay it in four equal annual year-end payments.

a. If the interest rate is 8%, what is the annual payment?

b. Fill in the following table, which shows how much of each payment is interest versus principal repayment (that is, amortization) and the outstanding balance on the loan at each date.

Consider a 4-year amortizing loan. You borrow $1,000 initially and

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Fundamentals of Corporate Finance

ISBN: 978-1259722615

9th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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Question Posted: Jun 24, 2017 08:56 AM

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Consider a 4-year amortizing loan. You borrow $1,000 initially and repay it in four equal annual year-end

Question:

Loan Year-End Interest Due on Loan Balance ($) Total Year-End Payment (S) Amortization of Time Balance($) Loan (S) 0 1,000 4 0

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Fundamentals of Corporate Finance

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