Question

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

Answer 1

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: