Question

In: Finance

. Your company is planning to borrow $300,000 now and repay it in equal installments during...

. 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.

Solutions

Expert Solution

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

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