• 100% Satisfaction Guarantee
Taxtom, Accountant
Category: Finance
Satisfied Customers: 2364
Experience:  25 Years in preparing Personal and Business Tax Retuns
21049508
Taxtom is online now

# In order to illustrate the concept of the time value of money,

### Resolved Question:

In order to illustrate the concept of the time value of money, let's consider the following scenario.

Mary has decided to borrow \$120,000. The terms of the loan are 6% over the next 4 years. She will be making annual payments (not monthly). This is an important distinction.

Construct a loan amortization schedule that shows the 4 payments of Mary’s loan.
Submitted: 5 years ago.
Category: Finance
Expert:  Taxtom replied 5 years ago.

Taxtom :

Taxtom :

 Principle Rate Interest Bal w/Int Pmt Bal \$120,000.00 0.06 \$7,200.00 \$127,200.00 \$34,630.98 \$92,569.02 \$ 92,569.02 0.06 \$5,554.14 \$ 98,123.16 \$34,630.98 \$63,492.18 \$ 63,492.18 0.06 \$3,809.53 \$ 67,301.71 \$34,630.98 \$32,670.73 \$ 32,670.73 0.06 \$1,960.24 \$ 34,630.98 \$34,630.98 \$ (0.00)
Taxtom :

Thanks Tom

Customer:

how did you come up with the payment of 34,630.98

Taxtom :

I plugged the figures (changed them until they equaled) but there are many calculators on the web also.

Customer:

ok i got it now thanks

Taxtom :