Excel Online Structured Activity: Amortization schedule

The data on a loan has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

a. Complete an amortization schedule for a $27,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 6% compounded annually. Round all answers to the nearest cent.

	Beginning			Repayment	Ending
Year	Balance	Payment	Interest	of Principal	Balance
1	$	$	$	$	$
2	$	$	$	$	$
3	$	$	$	$	$

b. What percentage of the payment represents interest and what percentage represents principal for each of the three years? Round all answers to two decimal places.

	% Interest	% Principal
Year 1:	%	%
Year 2:	%	%
Year 3:	%	%

c. Why do these percentages change over time?

1. 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.
2. 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.
3. 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.
4. 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.
5. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.

Excel Online Activity: Amortizati X MindTap - Cengage Learning x Excel Online Student Work x + about:blank x Excel template - Saved File Home Insert Formulas Data Review View Help Tell me what you want to do Comments BS fo B F H M N 5 1 Amortization schedule 3 Loan amount to be repaid Interest rate ir 5 Length of loan on vars) 6.00% 3 Setting up amortiention table 3 Cubunlarpeytt Fomuta UNA 9 RAAMAT RAYA RAAN 10 YAR TAN Reginning Raan Payment 11 1 12 13 3 14 15 b. Calculating of Payment Representing Interest and Principal for Each Year Payment Peyments Representing Represcrling 16 YA Inrost Princil 1 18 2 19 3 Check: Tula- 100% 21 Formu Interest Kamaining Baance AN RAMA Principal NA NO NA ANA Year Bognning Balance Payment 21 1 NA 31 M . 25 3 #NA NA 25 27 b. Calculating of Payment Representing Interest and Principal for Each Year Payeeri Payment Ring 28 I! Piiri 20 1 WNIA UNA 0 2 31 2 NA Chuck Tulg- 100% sh #NA 24 35 36 37 Sheet1 + Calculation Mode: Automatic Workbook Statistics Help Improve Office 70% + Odell-Brewing_0e8....jpg A Show all Type here to search O BI hulu 9 w 8:20 AM 9/30/2020 6