We first need to calculate the annual payment. With a present value of

\($10,000,\) an interest rate of 14 percent, and a term of five years, the payment can be determined from:

Therefore, the payment is \($10,000/3.4331\) \($2,912.84\) (actually, it’s \($2,912.8355;\) this will create some small rounding errors in the following schedule). We can now prepare the amortization schedule as follows:

Transcribed Image Text:

= $10,000 Payment x {[1 - (1/1.145)]/.14} = Payment X 3.4331