Suppose you bought a house and took out a mortgage for $50,000. The interest rate is 8 percent, and you must amortize the loan over 10 years with equal end-of-year payments. Set up an amortization schedule that shows the annual payments and the amount of each payment that goes to payoff the principal and the amount that constitutes interest expense to the borrower and interest income to the lender.
1. ?Create a bar chart that shows how the payments are divided between interest and principal repayment over time.
2. ?Suppose the loan called for 10 years of monthly payments, with the same original amount and the same nominal interest rate. Set up the amortization schedule.