How payments are sufficient to pay off accrued interest


Problem

You have been asked to calculate the current balance on a loan that involves 5 equal mortgage payments of $200,000 per year (principal and interest), but the interest rate changed on the loan is variable. in years 1, 2, and 3 the rate is a nominal 6.0% compounded annually and in years 4 and 5 the rate is a nominal 8.0% compounded annually. To verify the accuracy of your current loan balance calculation, develop a loan amortization schedule to demonstrate how the payments are not only sufficient to pay off the accrued interest over time, but also pay off the debt (principal).

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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Microeconomics: How payments are sufficient to pay off accrued interest
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