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Calculate the annual end of year payments

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Question - Kingbird recently invested in a project with a 3-year life span. The net present value was $10000 and annual cash inflows were $33000 for year 1; $35000 for year 2; and $37000 for year 3. The initial investment for the project, assuming a 15% required rate of return, was Joan Williams borrowed $15 000 at 14% annual rate of interest to be repaid over three years. The loan is repaid over three equal end of year payments.

i) Calculate the annual end of year payments

ii) Show a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments

iii) What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Why do these percentages change overtime?

Reference no: EM133185871

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