Set up an amortization schedule for a $25,000 loan to be repaid in equal installments at the end...
Question:
Set up an amortization schedule for a $25,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 10% compounded annually.
Amortization:
This can be used to make sure that the loan a person took is not as high as it would be if it was paid in full. It is done by spreading the principal and interest payments over a particular while. This allows more people to access loans.
Amortized Loan:
- An amortized loan is a financing option that allows the borrower to make periodic payments within a given term. The periodic payment will usually consist of interest charge and principal repayment.
- In fact, amortized payments will be required on the monthly basis. For instance, mortgage loans and auto loans are two common representatives of amortized loans. Since monthly payments are required, the borrower will handle a lower financial pressure.
- Note that, an amortized loan will offer either a fixed interest rate or a floating rate, which will depend on the lender's policies. However, usually monthly payments will be constant.
Answer and Explanation: 1
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View this answerThe equal annual payment of the 3 year loan is $10,052.87.
In this case, we need to calculate the equal annual payments of the loan using the...
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