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Time Value of Money: Loan Amortization Schedule

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Mary has decided to borrow $120,000. The terms of the loan are 6% over the next 4 years. She will be making annual payments (not monthly).

Construct a loan amortization schedule that shows the 4 payments of Mary's loan.

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Solution Summary

Solution describes the steps to estimate the annual payment amount in the given case. It also constructs a loan amortization schedule.

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Solution
First we should calculate the amount of 4 annual end of year payments.
Present value of loan=PV=$120,000
Interest rate=i=6%
Number of ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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