$($Amortization Schedule:: Activity $7\mathrm{.}5)$

$($a$)$ Capital recovery; $($b$)$ Balloon payment

Let us assume, Telford Plc$.$ has financed

$$1$ million from HSBC at the rate of $10\%$ for

$5$ years. The loan officer at the bank offers

Telford an amortization schedule for the

loan repayment.

Based on $($a$)$ Capital Recovery Method; $($b$)$ Balloon

Payment Method$-$prepare loan schedule with

regular payments as well as the allocation of

payments on interest and principal with

corresponding percentage.