Question

Prepare an amortization schedule for a three-year loan of $66,000. The interest rate is 11 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan?

Answer 1

Interest = 15,024.18 Amortization Payment = 27008.06 per year

Step-by-step explanation:

A = P * [ r(1+r)^n / ((1+r)^n - 1) ]

P = 66000

r = 11% = 0.11

n = 3

A = 66000 * [ 0.11(1.11)^3 / (1.11^3 - 1) ]

A = 27008.06

Total Payment = A * n = 27008.06 * 3

Total Payment = 81,024.18

Interest = Total Payment - P = 81024.18 - 66000

Interest = 15024.18