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Calculating the annual end-of-year loan payment

Question: Joan Messineo borrowed $15,000 at a 14 percent annual interest rate to be repaid over three years. The loan is amortized into three equal annual end-of-year payments.

Q1. Calculate the annual end-of-year loan payment.

Q2. Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments.

Q3. Explain why the interest portion of each payment declines with the passage of time.

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Finance Basics: Calculating the annual end-of-year loan payment

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