Open spreadsheet a. Complete an amortization schedule for a $33,000 loan to be repaid in equal installments at the end of each of the next three years. The interest rate is 6% compounded annually. Round all answers to the nearest cent. Beginning Balance Repayment of Principal Ending Balance Payment Interest Year 1 $ $ $ $ $ 2 $ $ $ $ 3 $ $ $ b. What percentage of the payment represents interest and what percentage represents principal for each of the three years? Round all answers to two decimal places. % Principal % Interest Year 1: % % Year 2 Year 3: % % 9. c. Why do these percentages change over time? 1. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outntanding balance declines, II. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance declines. TII. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance increases. IV. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance increases. V. These percentages do not change over time; interest and principal are each a constant percentage of the total payment. D Amortization schedule F Loan amount to be repaid (PV) Interest rate) Length of loan (in years) a Setting up amortization table Calculation of loan payment $33,000.00 6.00% 3 Forma MNIA Beginning Bdance Payment Interest Repayment of Principal 1 Remaining Balance You 1 2 3 2 4 5 b. Calculating % of Payment Representing Interest and Principal for Each Year Payment % Payment Representing Representing Interest Pancipal Check Total 100% 1 2 3 7 0 1 Form 2 3 Repayment of Principal ANIA MNIA Remaining Balance MN/A MNIA ANIA Yow Beginning Balance Payment Interest 1 UNIA ANIA MNIA 2 WNIA ANIA ANIA 3 WNIA MNIA MNIA b. Calculating % of Payment Representing Interest and Principal for Each Year Payment Payment % Representing Yea Representing Interest Principal Check Total = 100% +7 D a. Setting up amortization table Calculation of loan payment Formula MNIA Beginning Balance Payment Interest Repayment of Principal Remaining Balance 10 11 12 13 14 15 Yew 1 2 3 b. Calculating % of Payment Representing Interest and Principal for Each Year Payment % Payment % Representing Year Representing interest Principal Check: Total 100% 1 2 3 16 17 18 19 20 21 Formulas Remaining Balance Repayment of Principal MNIA MNA N/A UA 26 Year Beginning Balance Payment Interest 1 ANIA MNIA MNIA 2 MNIA MNIA WNA MNA MNIA b. Calculating % of Payment Representing Interest and Principal for Each Year Payment % Payment % Representing Yon Representing terest Principal Check Total 100% 1 WNIA MNIA WNIA WNIA WNIA MUA 28