Question

Medical Association of Orlando Inc. is borrowing $3,000,000 to expand its business. The loan will be for ten years at 8% and will be repaid in equal annual installments. Please complete the amortization schedule.

Answer 1

Loan amount = $ 3,000,000
Interest rate = 8%
Loan tenure = 10 years
EMI calculation = Loan amount / Annuity of interest rate for loan period
= $ 3000000/Annuity value of 8% for 10 years
= $ 3000000/6.7101
= $ 447088.50
Year	PVF 8%
1	0.9259
2	0.8573
3	0.7938
4	0.7350
5	0.6806
6	0.6302
7	0.5835
8	0.5403
9	0.5002
10	0.4632	3000000
	6.7101	447088.4661
Amortisation table:
Year	Interest	Principal	EMI amount	Loan out standing
0				$        3,000,000.00
1	$ 240,000.00	$ 207,088.50	$ 447,088.50	$        2,792,911.50
2	$ 223,432.92	$ 223,655.58	$ 447,088.50	$        2,569,255.92
3	$ 205,540.47	$ 241,548.03	$ 447,088.50	$        2,327,707.89
4	$ 186,216.63	$ 260,871.87	$ 447,088.50	$        2,066,836.03
5	$ 165,346.88	$ 281,741.62	$ 447,088.50	$        1,785,094.41
6	$ 142,807.55	$ 304,280.95	$ 447,088.50	$        1,480,813.46
7	$ 118,465.08	$ 328,623.42	$ 447,088.50	$        1,152,190.04
8	$    92,175.20	$ 354,913.30	$ 447,088.50	$ 797,276.74
9	$    63,782.14	$ 383,306.36	$ 447,088.50	$ 413,970.38
10	$    33,117.63	$ 413,970.38	$ 447,088.01	$ -