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Complete an amortization schedule for a $24,000 loan to be repaid in equal installments at the end of each of the next 3 years. The
Complete an amortization schedule for a $24,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 10% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent.
Beginning | Repayment | Remaining | |||
Year | Balance | Payment | Interest | of Principal | Balance |
1 | $ | $ | $ | $ | $ |
2 | |||||
3 |
What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Do not round intermediate calculations. Round your answers to two decimal places.
% Interest | % Principal | |
Year 1: | % | % |
Year 2: | % | % |
Year 3: | % | % |
Why do these percentages change over time?
- These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines.
- These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance declines.
- These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance increases.
- These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance increases.
- These percentages do not change over time; interest and principal are each a constant percentage of the total payment.
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