Complete an amortization schedule for a $48,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 11% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent.   Beginning     Repayment Ending Year Balance Payment Interest of Principal Balance 1 $   $   $   $   $   2                          3

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
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  1. Complete an amortization schedule for a $48,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 11% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent.

      Beginning     Repayment Ending
    Year Balance Payment Interest of Principal Balance
    1 $   $   $   $   $  
    2                         
    3                         
  2. What percentage of the payment represents interest and what percentage represents principal for each of the three 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?

    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.
 
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