# CH08d HW – Amortizing Loans

I’m stuck on a Business question and need an explanation.

Important General Instructions for Reporting Numerical Answers:
– Do not round intermediate calculations.
– Unless otherwise instructed, solve problems in the given units. IE: if given units are in \$K, complete your computations in these units and, as applicable, report your answer in these units (without writing “\$” or “K”).
– Do not report any numerical answer as a percent. IE: for example, write
– Report negative numbers with a leading minus sign, like this (for example):
-23.451
Not like this: (23.451).
– Note that Canvas removes trailing insignificant figures. If you type, for example, 41.350, Canvas will remove the last decimal place and record your answer as 41.35 This is fine because 41.35 = 41.350.
– Assume time is measured in years unless otherwise stated.

Consider this incomplete amortization schedule for a five-year loan of \$71,500. The interest rate (r) is 7 percent compounded annually, and the loan calls for equal annual payments at the end of each year, starting with year 1. Answer all of the following questions based on this information.

 Quantity Year 0 1 2 3 4 5 BOP Balance NA Loan Payment NA Interest portion NA Amortization NA EOP Balance \$71,500

Q1:
What is the uniform annual loan payment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Q2:
What is the BOP balance in year 2? (Do not round intermediate calculations and round your answer to two decimal places, e.g., 32.16.)

Q3:
What is the interest portion of the loan payment in year 2? (Do not round intermediate calculations and round your answer to two decimal places, e.g., 32.16.)

Q4:
What is the amortization amount (amount of principal repayment) in year 2? (Do not round intermediate calculations and round your answer to two decimal places, e.g., 32.16.)

Q5:
What is the EOP balance in year 2? (Do not round intermediate calculations and round your answer to two decimal places, e.g., 32.16.)

Q6:
What is the EOP balance in year 5? (Do not round intermediate calculations and round your answer to two decimal places, e.g., 32.16.)