Reference no: EM132658440

Question 1: do an amortization schedule for a $38,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 12% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent.

Question 2: What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Do not round intermediate calculations. Round your answers to two decimal places.
% Interest% PrincipalYear 1: % %Year 2: % %Year 3: % %

Question 3: Why do these percentages change over time?

Option 1: These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines.

Option 2: These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance declines.

Option 3: These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance increases.

Option 4: These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance increases.

Option 5: These percentages do not change over time; interest and principal are each a constant percentage of the total payment.