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Spreadsheet Use The annual deposit needed to accumulate the future sum also
can be calculated as shown on the following Excel spreadsheet. CHAPTER 4 Time Value of Money 161 Loan Amortization
The determination of the equal
periodic loan payments
necessary to provide a lender
with a specified interest return
and to repay the loan principal
over a specified period.
loan amortization schedule
A schedule of equal payments to
repay a loan. It shows the allocation of each loan payment to
interest and principal. The term loan amortization refers to the computation of equal periodic loan payments. These payments provide a lender with a specified interest return and
repay the loan principal over a specified period. The loan amortization process
involves finding the future payments, over the term of the loan, whose present
value at the loan interest rate equals the amount of initial principal borrowed.
Lenders use a loan amortization schedule to determine these payment amounts
and the allocation of each payment to interest and p...
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