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You borrow money on a self liquidating installment loan (equal payments at the end of each year, each payment is part principal part interest)

Loan amount

$704,000

Interest Rate

16.7%

Life

62 years

Date of Loan

January 1, 2021

Use the installment method - not straight line

Do NOT round any interrmediate numbers.

Do NOT turn this into a monthly problem.

Do NOT put in minus signs, answer all positive numbers.

Required:

1. What is the annual payment (round to the nearest $)?

$

2. What are the total interest payments (round to the nearest $)?

$

3. After 24 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)?

%

4. After 24 payments have been made, what percentage of the total principal has been paid (round to the nearest percentage point)?

%

Redo the problem if the interest rate is 3%

(for a well designed spreadsheet this should take 30 seconds)

Required:

5. What is the annual payment (round to the nearest $)?

$

6. What are the total interest payments (round to the nearest $)?

$

7. After 24 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)?

%

8. After 24 payments have been made, what percentage of the total principal has been paid (round to the nearest percentage point)?

%

Answer & Explanation Solved by verified expert

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