Prepare an amortization table for the calculation of interest and payment of the Document payable to...

Prepare an amortization table for the calculation of interest and payment of the Document payable to a natural person, for $ 2,000,000 at the annual rate of 12%, payable in 3 years. The interest plus the payment of the document will be made at the end of the 3 years. Calculate with simple interest and also calculate cost with compound interest

Expert Solution

Given Amount of Loan Taken from a Natural Person = 2,000,000

Annual Rate of interest = 12% per annum.

It is clearly given that the loan will be paid at the end of Year -3

Simple Interest -

We know that the formula for simple interest is N*R*T

N = Investment/ Borrowing

R = Rate of interest

T = Total Years or Time periods

Hence Simple Interest = 2,000,000 * 0.12*3 = 7,20,000.

Compound Interest -

Compound Interest and Loan Balance can be Tabulated as below.

Years	Opening Loan	Interest @ 12%	Closing Balance
1	20,00,000	2,40,000	22,40,000
2	22,40,000	2,68,800	25,08,800
3	25,08,800	3,01,056	28,09,856

Total Compound interest is 809856

jeff jeffy answered 1 year ago

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