Question

On January 1, Year 1, Beatie Co. borrowed $200,000 cash from Central Bank by issuing a five-year, 6 percent note. The principal and interest are to be paid by making annual payments in the amount of $47,479. Payments are to be made December 31 of each year, beginning December 31, Year 1.
Required:
1. Prepare an amortization schedule for the interest and principal payments for the five-year period. (Round your answers to the nearest dollar amount.)

Answer 1

Answer:

Amortization Schedule is attached with answer please find it.

Explanation:

Loan Payment includes the the principal and interest payment for the period. First we calculate the interest portion in the payment and then residual amount after deducting the interest portion is considered as the principal payment.

In this question the loan payment of $47,479 includes the Interest payment and principal payment as well, which is shown separately in the schedule.

Answer 2

Ending balance after 5 year is $0.

Computation Table;

Amortization schedule                                                                            

Year   O.Bal(A)   C.Pay(B)   Int(O.bal 6%)(D)   Pri(C - Int)(E)   E.bal(F)

2016   200000   47479             12000                35479             164521

2017   164521      47479             9871                   37608            126913

2018   126913      47479             7615                  39864             87049

2019   87049      47479             5223                  42256            44793

2020  44793      47479              2686                 44793                 0

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