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)?
%
