Question

In: Finance

7. You borrow $35,000 today and will make equal annual payments for the next 3 years,...

7. You borrow $35,000 today and will make equal annual payments for the next 3 years,

    starting in 1 year.

a. What is the value of the annual payment if the nominal interest on the loan is:

9.50%

Payment

b. Show the amortization of the loan in the table set up below:

Year

Beg. Balance

Payment

Interest

Principal

Ending Balance

1

2

3

TOTAL

Excel function or formula answer please

Solutions

Expert Solution

Note:

1. In excel, annual payment can be found using the function =pmt as follows:

=pmt(rate,nper,pv,fv) where

rate = nominal interest rate = 9.5%

nper = period = 3

pv = $35,000 (to be entered as negative)

fv = 0

2. Amortisation table provided above for 3 years

Workings:

jeff jeffy answered 1 year ago
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