Question

Prepare amortization schedule for a five-year loan of $167,500. The interest rate is 17 percent per year and the loan calls for equal annual payments. How much interest is paid in the third year? How much total interest is paid over the life of the loan?

(No excel sheet)

Answer 1

Interest paid in the third year is $ 19,665.87

Total Interest paid is   $ 94,272.24

Step-1:Calculation of annual equal payment
Annual equal payment	=-pmt(rate,nper,pv,fv)
	= $ 52,354.45
Where,
rate	=	17%
nper	=	5
pv	=	$ 1,67,500.00
fv	=	0
Step-2:Preparation of Amortization Schedule for 5 years loan
Year	Beginning Loan	Annual Payment	Interest	Principal repayment	Ending Loan
	a	b	c=a*17%	d=b-c	e=a-d
1	$ 1,67,500.00	$     52,354.45	$     28,475.00	$       23,879.45	$ 1,43,620.55
2	$ 1,43,620.55	$     52,354.45	$     24,415.49	$       27,938.95	$ 1,15,681.60
3	$ 1,15,681.60	$     52,354.45	$     19,665.87	$       32,688.58	$     82,993.02
4	$     82,993.02	$     52,354.45	$     14,108.81	$       38,245.63	$     44,747.39
5	$     44,747.39	$     52,354.45	$       7,607.06	$       44,747.39	0
	Total	$ 2,61,772.24	$     94,272.24	$    1,67,500.00