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?
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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from Focus on Personal Finance: Online Textbook HelpChapter 5 / Lesson 17