Amortization Schedule

Consider a $$45,000$ loan to be repaid in equal instaliments at the end of each of the next $5$ years. The interest rate is $6\%.$

a$.$ Set up an amortization schedule for the loan. Do not round intermeciate calculations. Round your answers to the nearest cent. If no entry

is required, enter $"0".$

b$.$ How large must each annual payment be if the loan is for $$90,000?$ Assume that the interest rate remains at $6\%$ and that the loan is still

paid off aver $5$ years. Do not round intermeclate calculations. Rlound your answer to the nearest cent.

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C$.$ How large must each payment be if the loan is for $$90,000,$ the interest rate is $6\%,$ and the loan is paid off in equal installments at the

end of each of the next $10$ years? This loan is for the same amount as the laan in part b$,$ but the payments are spread out over twice as

many periods. Do not round intermediate calculations. Raund your answer to the nearest cent.

$

Why are these payments not half as large as the payments on the loan in part b$?$

Because the payments are spread out aver a longer time period, less interest is paid on the loan, which raises the amount of each

payment.

II$.$ Because the payments are spread out over a longer time period, less interest is paid on the loan, which lowers the amount of each

payment.

III. Because the payments are spread out over a shorter time period, more interest is paid on the loan, which lowers the amount of each

payment.

IV$.$ Because the payments are spread out over a longer time period, more interest must be paid on the loan, which raises the amount of

each payment.

V$.$ Because the payments are spread out over a longer time period, more principal must be paid on the loan, which raises the amount of

each payment.

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Partially Correct