Question

You borrow money on a self liquidating installment loan (equal payments at the end of each year, each payment is part principal part interest)
Loan amount $989,000
Interest Rate 11. 7%
Life 48 years
Date of Loan January 1, 2021
1. What is the annual payment (round to the nearest $)?
2. What are the total interest payments (round to the nearest $)?
3. After 28 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)?
4. After 28 payments have been made, what percentage of the total principal has been paid (round to the nearest percentage point)
5. What is the annual payment (round to the nearest $)?
6. What are the total interest payments (round to the nearest $)?
After 28 payments have been made, what percentage of the total interest has been paid (round to the nearest percentage point)?
8. After 28 payments have been made, what percentage of the total principal has been paid (round to the nearest percentage point)?

Answer 1

The percentage of total interest paid after 28 payments is 69%, and the percentage of total principal paid after 28 payments is 10%.

Calculations of a Loan Annual Payment and Total Interest Payments

Note: Only questions 1 to 4 are relevant as questions 6 to8 are just repetitions of questions 1 to 4 respectively.

Also Note: See the attached photo for the loan amortization schedule for the self-liquidating installment loan.

From the attached photo, we can answer the questions as follows:

1. Annual payment = $116,287

2. Total interest payments = Total of interest = $4,592,780

3. Percentage of total interest paid after 28 payments = Cumulative interest payment at Year 28 /  Total interest payments = $3,152,232 / $4,592,780 = 0.69, or 69%

4. Percentage of total principal paid after 28 payments = Cumulative annual principal at Year 28 / Total principal payments = $103,806 / $989,000 = 0.10, or 10%

Learn more about a loan amortization schedule here: https://brainly.com/question/17261176.