Complete an amortization schedule for a $38,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 7% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning Balance $ Year 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 Payment % % % Interest Repayment of Principal $ Remaining Balance Year 1: % Year 2: % Year 3: % Why do these percentages change over time? I. 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. II. 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. III. 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. IV. 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. V. These percentages do not change over time; interest and principal are each a constant percentage of the total payment. -Select-
Complete an amortization schedule for a $38,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 7% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent. Beginning Balance $ Year 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 Payment % % % Interest Repayment of Principal $ Remaining Balance Year 1: % Year 2: % Year 3: % Why do these percentages change over time? I. 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. II. 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. III. 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. IV. 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. V. These percentages do not change over time; interest and principal are each a constant percentage of the total payment. -Select-
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:3. Complete an amortization schedule for a $38,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 7%
compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent.
Beginning
Balance
$
% Interest
Year
1
2
3
ɔ. 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.
% Principal
Payment
$
%
%
%
%
Interest
$
%
Repayment.
of Principal
$
Year 1:
Year 2:
Year 3:
%
Why do these percentages change over time?
I. 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.
Remaining
Balance
$
II. 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.
III. 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.
IV. 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.
V. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.
-Select-
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