Using the Loan Amortization Chart Follow the instructions in the NET @ssets box at the beginning of Section 14.1 for accessing and using the Loan Amortization Chart in this textbook’s Web site. Enter $10,000 for the “Loan amount” and 7.5% for the monthly compounded “Interest rate.”
a. Compare the profiles of the bar charts for loan terms of 30 months and 30 years. Approximately what percentage of the original principal is paid off midway through the term in each case?
b. Prepareatablepresentingthetotalinterestpaidoverthelifeoftheloanforterms of 5, 10, 15, 20, 25, and 30 years.
c. Next, vary the “Term in months” to find the term for which the total interest paid over the life of the loan equals:
(i) The original principal, and
(ii) 1.5 times the original principal.