Loan Amortization Schedule
Amount borrowed: $10,000 at a 13% annual rate of interest to be repaid over 3 years. The loan is amortized int 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.
(d) Use an Excel spreadsheet to show your computations.
(e) Show computation for "Cumulative discount factor."