Example Amortization Schedule

Year Beginning Amount Payment Interest Repayment of Principal Ending Balance

$1$

$2$

$3$

The periodic $($for example, monthly, quarterly, or annual$)$ payment for an amortized loan is determined as the payment term in the formula for the

calculation of the

value of an annuity.

True or False: The payments on an amortized loan contain both interest and principal. In the event that an amortized loan is to be repaid using more$-$

frequent$-$than$-$annual payments, the calculation of the payment $($PMT$)$ for an amortized loan requires the adjustment of both the interest rate and the

number of time periods in the annuity formula.

False

True

Your dream is coming true! You are about to complete the purchase of your first home. To do so$,$ you will borrow $$150,000$ from a savings and loan

association that requires an interest rate of $8\mathrm{.}00\%$ on your loan. To simplify your workload, assume that you will repay your mortgage loan over the

next four years by making annual payments at the end of each year.

Complete the following loan amortization table by selecting the correct answers: