Question

4. A loan of $50,000 is to be repaid by 10 annual payments which are made at the beginning of the year. The first 6 payments are $K each and the remaining 4 payments are $2K each. Construct the amortization schedule if the annual effective interest rate is 6%.

Answer 1

Hello Sir/ Mam

Please find below the payment schedule:

Years	Principal	Principal Payment at Beginning	Interest	Installment	Closing Balance
1	$50,000.00	$4,811.85	$0.00	$4,811.85	$45,188.15
2	$45,188.15	$2,100.56	$2,711.29	$4,811.85	$43,087.60
3	$43,087.60	$2,226.59	$2,585.26	$4,811.85	$40,861.00
4	$40,861.00	$2,360.19	$2,451.66	$4,811.85	$38,500.82
5	$38,500.82	$2,501.80	$2,310.05	$4,811.85	$35,999.02
6	$35,999.02	$2,651.91	$2,159.94	$4,811.85	$33,347.11
7	$33,347.11	$7,622.87	$2,000.83	$9,623.69	$25,724.25
8	$25,724.25	$8,080.24	$1,543.45	$9,623.69	$17,644.01
9	$17,644.01	$8,565.05	$1,058.64	$9,623.69	$9,078.96
10	$9,078.96	$9,078.96	$544.74	$9,623.69	$0.00

I hope this solves your doubt.

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