1. Construct a loan amortization schedule for a 20-year, 8.45% loan of $12,000,000. The loan requires equal, end-of-year payments and interest is compounded monthly.
- What is the total amount of interest paid over the life of the loan?
2. Re-construct this amortization schedule assuming that interest is compounded yearly instead, and payments are still made at end-of-year.
- What total amount of interest is paid over the life of the loan?
- What is the difference between those total interest amounts?
3. Assume that in sections 1 and 2 above, there is a balloon payment requirement right after the tenth (10th) year’s annual payment.
- What is the balloon payment in section 1?
- What is the balloon payment in Section 2?
- What is the difference between these amounts?
B.- 1. Construct a loan amortization schedule for a $3,500,000, 3-year loan, made at 6.85% quoted annual rate. Interest is compounded daily, and the loan requires equal end-of-period monthly payments.
- What is the total amount of interest paid on this loan?