calculate a loan amortization schedule for a $10,000 loan, 5% annual interest, one payment a year...

calculate a loan amortization schedule for a $10,000 loan, 5% annual interest, one payment a year for 10 years, starting on 1/1/2010. All calculations must be shown, i.e., do not use a “package” to complete this question.

Loan period starts from 1/1/2010. I mean the first payment is to be made on 1/1/2010.

Expert Solution

Annual Instalment = Loan / PVAF (r%, n)
PVAF = SUm [ PVF(r%, n) ]
PVF(r%, n) = 1 / ( 1 + r)^n
r = Int rate per period
n = No. of periods

= $ 10000 / PVAF(5%,10)

= $ 10000 / 7.7217

= $ 1295.05

Loan AMortization Schedule:

Year	Opening Bal	Instalment	Int	Principla Repay	Closing Bal
1	$ 10,000.00	$ 1,295.05	$ 500.00	$ 795.05	$ 9,204.95
2	$ 9,204.95	$ 1,295.05	$ 460.25	$ 834.80	$ 8,370.16
3	$ 8,370.16	$ 1,295.05	$ 418.51	$ 876.54	$ 7,493.62
4	$ 7,493.62	$ 1,295.05	$ 374.68	$ 920.36	$ 6,573.25
5	$ 6,573.25	$ 1,295.05	$ 328.66	$ 966.38	$ 5,606.87
6	$ 5,606.87	$ 1,295.05	$ 280.34	$ 1,014.70	$ 4,592.17
7	$ 4,592.17	$ 1,295.05	$ 229.61	$ 1,065.44	$ 3,526.73
8	$ 3,526.73	$ 1,295.05	$ 176.34	$ 1,118.71	$ 2,408.02
9	$ 2,408.02	$ 1,295.05	$ 120.40	$ 1,174.64	$ 1,233.38
10	$ 1,233.38	$ 1,295.05	$ 61.67	$ 1,233.38	$ -0.00

Pls do rate, if the answer is correct and comment, if any further assistance is required.

jeff jeffy answered 2 years ago

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