You are looking to do an addition to your home and anticipate taking a loan to pay for it.

The proposed cost of the improvements is $30,000.00. After speaking with the bank, you

can obtain a 10 year loan at 5% annual interest. Using the interest rate charts is

acceptable, if applicable.

3A)

Prepare an amortization chart, similar to the one discussed in class, for the loan if it is paid

back on a yearly basis. Show all calculations (separate from the table) for the yearly loan

payment, interest paid and principal paid. Show the sums for all interest, principal and

yearly payments made. Adding a column for cumulative monthly principal payments is

helpful.

3B

In a separate calculation, what would the monthly loan payment be if you decided to make

monthly payments instead? What is the total amount paid on the loan? What is the total

principal paid? What is the total interest paid on the loan? Show all calculations. No need

to do an amortization chart for the monthly option.