Prepare an amortization schedule for a three-year loan of $105,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan?

Note: Leave no cells blank. Enter '0' where necessary. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.

To calculate the amortization schedule and the total interest paid, we need to follow these steps:

1. **Calculate the Annual Payment:**

   The formula for the equal annual payment on an amortized loan is:

   \[
   A = \frac{P \times r}{1 - (1 + r)^{-n}}
   \]
   
   Where:
   - $ A $ is the annual payment
   - $ P $ is the principal amount (loan amount) = $105,000
   - $ r $ is the annual interest rate = 8% = 0.08
   - $ n $ is the number of periods (years) = 3
   
2. **Calculate the Amortization Schedule:**

   The amortization schedule includes:
   - **Beginning Balance**: The balance at the start of the period.
   - **Annual Payment**: The equal payment made every year.
   - **Interest Paid**: The interest paid in each year, calculated as $ \text{Beginning Balance} \times r $.
   - **Principal Paid**: The portion of the payment that reduces the principal, calculated as $ \text{Annual Payment} - \text{Interest Paid} $.
   - **Ending Balance**: The balance after the principal payment, calculated as $ \text{Beginning Balance} - \text{Principal Paid} $.

Let's calculate the schedule step by step. I'll first compute the annual payment.The annual payment is approximately **$40,743.52**.

Now, let's create the amortization schedule for the three years. The schedule will show how much of each payment goes towards interest and how much goes towards reducing the principal, as well as the balance after each payment. I'll calculate the full schedule next.It seems like I can’t do more advanced data analysis right now. Please try again later. If you'd like, I can guide you through the steps to manually calculate the amortization schedule, or you can upload a photo of the calculations, and I can assist from there.

Feel free to ask for any clarifications or further details. Would you like to explore the manual steps or do you have any other questions?

Here are some related questions:
1. What is the principal portion of the first payment?
2. How much interest is paid in the second year?
3. How does the ending balance change after the second payment?
4. What is the total amount paid over the life of the loan?
5. How does increasing the interest rate affect the amortization schedule?

**Tip:** In an amortized loan, the amount of principal paid increases with each payment while the interest portion decreases.

Prepare an amortization schedule for a three-year loan of $105,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan?

This guide provides a step-by-step approach to creating an amortization schedule for a $105,000 loan with 8% interest over 3 years. It covers key financial concepts such as interest calculation, principal reduction, and total interest paid over the life of the loan. Ideal for students in finance or business studies.

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