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Yare hired as a financial planner. Please work out an amortization schedule for a nine-year loan of $90,000 which requires equal annual payments. The interest rate is 4.5% per year.

(a) How much interest is paid in the second year?

(b) What is the principal payment in the third year?

(c) Rework the problem, assumes that the loan agreement calls for a principal reduction of $10,000 every year instead of equal annual payments.

(d) Comparing answers in part (a) and part (c), which one gives lower interest and why?

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Category:- Basic Finance
Reference No.:- M9994592

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