In: Finance
. Your company is planning to borrow $300,000 now and repay it in equal installments during the next four years at 5 percent annual interest rate to fully amortize the loan.
Calculate the equal yearly installments to fully repay the loan. Show your Work
b. Prepare a complete schedule of amortization table for this loan. Show it
in a table.
A) Amount of yearly installment = Amount borrowed /PVA 5%,4
= 300000/ 3.54595
= 84603.56
B)
year | Amount paid | Interest | Decrease in principal amount | carrying value |
1 | 84603.56 | 15000 [300000*.05] | 69603.56 [84603.56-15000] | 300000-69603.56= 230396.44 |
2 | 84603.56 | 11519.82 [230396.44*.05] | 73083.74 | 157312.70 [230396.44-73083.74] |
3 | 84603.56 | 7865.64 | 76737.92 | 80574.78 |
4 | 84603.56 | 4028.78 | 80574.78 | 0 |