Amortization Schedule Set up an amortization schedule for a $40,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 6%. Round your answers to the nearest cent. Enter \"0\" if required How large must each annual payment be if the loan is for $80,000? Assume that the interest rate remains at 6% and that the loan is paid off over 5 years. Round your answer to the nearest cent. $ How large must each payment be if the loan is for $80,000, the interest rate is 6%, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Round your answer to the nearest cent. $ Why are these payments not half as large as the payments on the loan in part b? -Select-VIVIIIIIIItem 26 I. Because the payments are spread out over a longer time period, less interest is paid on the loan, which lowers the amount of each payment. II. Because the payments are spread out over a shorter time period, more interest is paid on the loan, which lowers the amount of each payment. III. Because the payments are spread out over a longer time period, more interest must be paid on the loan, which raises the amount of each payment. IV. Because the payments are spread out over a longer time period, more principal must be paid on the loan, which raises the amount of each payment. V. Because the payments are spread out over a longer time period, less interest is paid on the loan, which raises the amount of each payment. Amortization Schedule a. Set up an amortization schedule for a $40,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 6%. Round your answers to the nearest cent. Enter \"0\" if required Year Payment Repayment Interest Repayment of Principal Balance 1 $ $ $ $ 2 $ $ $ $ 3 $ $ $ $ 4 $ $ $ $ 5 $ $ $ $ Total $ $ $ b. How large must each annual payment be if the loan is for $80,000? Assume that the interest rate remains at 6% and that the loan is paid off over 5 years. Round your answer to the nearest cent. $ c. How large must each payment be if the loan is for $80,000, the interest rate is 6%, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Round your answer to the nearest cent. $ Why are these payments not half as large as the payments on the loan in part b? -Select-VIVIIIIII I. Because the payments are spread out over a longer time period, less interest is paid on the loan, which lowers the amount of each payment. II. Because the payments are spread out over a shorter time period, more interest is paid on the loan, which lowers the amount of each payment. III. Because the payments are spread out over a longer time period, more interest must be paid on the loan, which raises the .

1. Amortization Schedule
Set up an amortization schedule for a $40,000 loan to be repaid in equal installments at the end
of each of the next 5 years. The interest rate is 6%. Round your answers to the nearest cent. Enter
"0" if required
How large must each annual payment be if the loan is for $80,000? Assume that the interest rate
remains at 6% and that the loan is paid off over 5 years. Round your answer to the nearest cent.
$
How large must each payment be if the loan is for $80,000, the interest rate is 6%, and the loan is
paid off in equal installments at the end of each of the next 10 years? This loan is for the same
amount as the loan in part b, but the payments are spread out over twice as many periods. Round
your answer to the nearest cent.
$
Why are these payments not half as large as the payments on the loan in part b?
-Select-VIVIIIIIIItem 26
I. Because the payments are spread out over a longer time period, less interest is paid on the loan,
which lowers the amount of each payment.
II. Because the payments are spread out over a shorter time period, more interest is paid on the
loan, which lowers the amount of each payment.
III. Because the payments are spread out over a longer time period, more interest must be paid on
the loan, which raises the amount of each payment.
IV. Because the payments are spread out over a longer time period, more principal must be paid
on the loan, which raises the amount of each payment.
V. Because the payments are spread out over a longer time period, less interest is paid on the
loan, which raises the amount of each payment.
Amortization Schedule a. Set up an amortization schedule for a $40,000 loan to be repaid in
equal installments at the end of each of the next 5 years. The interest rate is 6%. Round your
answers to the nearest cent. Enter "0" if required Year Payment Repayment Interest Repayment
of Principal Balance 1 $ $ $ $ 2 $ $ $ $ 3 $ $ $ $ 4 $ $ $ $ 5 $ $ $ $ Total $ $ $ b. How large
must each annual payment be if the loan is for $80,000? Assume that the interest rate remains at
6% and that the loan is paid off over 5 years. Round your answer to the nearest cent. $ c. How
large must each payment be if the loan is for $80,000, the interest rate is 6%, and the loan is paid

2. off in equal installments at the end of each of the next 10 years? This loan is for the same amount
as the loan in part b, but the payments are spread out over twice as many periods. Round your
answer to the nearest cent. $ Why are these payments not half as large as the payments on the
loan in part b? -Select-VIVIIIIII I. Because the payments are spread out over a longer time
period, less interest is paid on the loan, which lowers the amount of each payment. II. Because
the payments are spread out over a shorter time period, more interest is paid on the loan, which
lowers the amount of each payment. III. Because the payments are spread out over a longer time
period, more interest must be paid on the loan, which raises the amount of each payment. IV.
Because the payments are spread out over a longer time period, more principal must be paid on
the loan, which raises the amount of each payment. V. Because the payments are spread out over
a longer time period, less interest is paid on the loan, which raises the amount of each
payment.YearPaymentRepayment InterestRepayment of
PrincipalBalance1$$$$2$$$$3$$$$4$$$$5$$$$Total$$$
Solution
1 Formula for loan amortization = A= [i*P*(1+i)^n]/[(1+i)^n-1] Amt $ A
= periodical installment P=Loan amount = 40,000 i= interest rate per period =
6.00 % n=total no of payments 5 A = [0.06*40000*1.06^5]/[1.06^5-
1] =9496 so annual payment required = $ 9,496.00 Amortization
Schedule Year Installment paid Interest paid Principal Balance Principal 1
9,496 2,400 7,096
32,904 2 9,496
1,974 7,522 25,382 3
9,496 1,523 7,973
17,409 4 9,496
1,045 8,451 8,958 5
9,496 537 8,959
(1) If the loan is $80,000 2 Formula for loan
amortization = A= [i*P*(1+i)^n]/[(1+i)^n-1] Amt $ A = periodical installment
P=Loan amount = 80,000 i= interest rate per period = 6.00 % n=total no of
payments 5 A = [0.06*80000*1.06^5]/[1.06^5-1] =18,992 so annual payment
required = $ 18,992.00 if the loan tenure is 10 years 3
Formula for loan amortization = A= [i*P*(1+i)^n]/[(1+i)^n-1] Amt $ A = periodical
installment P=Loan amount = 80,000 i= interest rate per period = 6.00 %
n=total no of payments 10 A = [0.06*80000*1.06^10]/[1.06^10-1] =10,869 so
annual payment required = $ 10,869.00 These payments are not half of the 5

3. years tenure loan as III. Because the payments are spread out over a longer time
period, more interest must be paid on the loan, which raises the amount of each payment.