What is the annual interest expense for the borrower

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Problem - Assume that you are nearing graduation and have applied for a job with a local bank. The bank's evaluation process requires you to take an examination that covers several financial analysis techniques. The first section of the test addresses discounted cash flow analysis. See how you would do by answering the following questions.

(1) Construct an amortization schedule for a $1,000, 10% annual rate loan with three equal installments.

(2) During Year 2, what is the annual interest expense for the borrower, and what is the annual interest income for the lender?

Reference no: EM132726687

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