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Set up an amortization schedule for a $25,000 loan to be repaid in equal installments at the end...

Question:

Set up an amortization schedule for a $25,000 loan to be repaid in equal installments at the end of each of the next 3 years. Interest rate is 10% compounded annually. What percentage of the payment represents interest, and what percentage represents principal for each of the 3 years?

Amortization schedule

The amortization schedule is the repayment plan for the loan that one takes. The installment amount represents a component of principle and interest.

Answer and Explanation:

Formula to Calculate EMI is = (Principle * Rate * (1+Rate)^Number of year) / ((1+Rate)^Number of year - 1)

So the EMI in this case = (25,000 * 3% *...

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Debt Repayment Issues: Signs & Examples
Debt Repayment Issues: Signs & Examples

from Focus on Personal Finance: Online Textbook Help

Chapter 5 / Lesson 17
169

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