Jinan Hadi borrowed US$15,000 at a 14 percent annual rate of interest to be repaid over 3 years. The loan is amortized into three equal, annual, end-of-year payments.
a. Calculate the annual, end-of-year loan payment.
b. Prepare a loan amortization schedule showing the interest and principal break- down of each of the three loan payments.
c. Explain why the interest portion of each payment declines with the passage of time.