Your company is planning to borrow $1,000,000 on a 5-year,15%,annual payment,fully amortized term loan.What fraction of the payment made at the end of the second year will represent repayment of principal?
A) 29.83%
B) 57.18%
C) 35.02%
D) 64.45%
E) 72.36%

Question

Quizplus · Accepted Answer

Step 1 - Calculate the payment.
PV = PMT × 11ea7fdb_fc1e_bea9_a768_6da8756d024b_TB2902_11 PMT = PV / 11ea7fdb_fc1e_beaa_a768_6b98e85c28e6_TB2902_11 PMT = 1,000,000 / 11ea7fdb_fc1e_beab_a768_97854458bec9_TB2902_11 = $298,315.55
Using a financial calculator:
N = 5, I = 15, PV = -1,000,000, FV = 0, cpt PMT = $298,315.55
Step 2 - Build an amortization table.
 11ea7fdb_fc1e_beac_a768_239821b47c1a_TB2902_00 170,562.88 / 298,315.55 = .5718 or 57.18%

Your Company Is Planning to Borrow $1,000,000 on a 5-Year,15%,annual