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Unformatted text preview: sit at the end of each of the next 10 years to accumulate the required amount? LG6 4–42 Loan payment Determine the equal annual end-of-year payment required each year, over the life of the loans shown in the following table, to repay them fully during the stated term of the loan. Loan Principal Interest rate A $12,000 B 60,000 12 10 C 75,000 10 30 D 4,000 15 5 8% Term of loan (years) 3 LG6 4–43 Loan amortization schedule Joan Messineo borrowed $15,000 at a 14% annual rate of interest to be repaid over 3 years. The loan is amortized into three equal annual end-of-year payments. a. Calculate the annual end-of-year loan payment. b. Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments. c. Explain why the interest portion of each payment declines with the passage of time. LG6 4–44 Loan interest deductions Liz Rogers just closed a $10,000 business loan that is to be repaid in three equal annual end-of-year payments. The inte...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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