3C Q3

Part 1

Amortization with Equal Payments [LO3] Prepare an amortization schedule for a five-year loan of $67,500. The interest rate is 7 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year? How much total interest is paid over the life of the loan?

Part 2

Amortization with Equal Principal Payments [LO3] Rework the previous Problem assuming that the loan agreement calls for a principal reduction of $13,500 every year instead of equal annual payments.