A- 1. Construct a loan amortization schedule for a 20-year, 8.45% loan of $12,000,000. The loan requires equal, end-of-year payments, and interest is compounded monthly.

- What is the total amount of interest paid over the life of the loan?

Note: The amortization schedules are to be done in Excel using this format:

Year

Beginning Amount

Payment

Interest Paid

Principal Paid

Ending Balance

2. Re-construct this amortization schedule assuming that interest is compounded yearly instead, and payments are still made at end-of-year. - What total amount of interest is paid over the life of the loan?

- What is the difference between those total interest amounts?

3. Assume that in sections 1 and 2 above, there is a balloon payment requirement right after the tenth (10th) years annual payment.

- What is the balloon payment in section 1?

- What is the balloon payment in Section 2?

- What is the difference between these amounts?

B.- 1. Construct a loan amortization schedule for a $3,500,000, 3-year loan, made at 6.85% quoted annual rate. Interest is compounded daily, and the loan requires equal end-of-period monthly payments.

- What is the total amount of interest paid on this loan?