Grade 12 Amortization Worksheet
This worksheet covers key concepts of amortization, including loan payments, interest calculations, and amortization schedules, suitable for Grade 12 financial literacy.
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Grade 12 Amortization Worksheet
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Read each question carefully and provide your answers in the space provided. Show all your work for calculations.
1. Which of the following best describes the process of amortization?
Paying off a loan in one lump sum.
Gradually paying off a debt over time through regular payments.
Only paying the interest on a loan.
Increasing the principal amount of a loan over time.
2. What is the primary purpose of an amortization schedule?
To calculate the total interest paid on a loan.
To show the breakdown of each loan payment into principal and interest.
To determine the loan's annual percentage rate (APR).
To calculate the initial loan amount.
3. The portion of a loan payment that goes towards reducing the outstanding balance is called the .
4. As a loan is amortized, the amount of each payment allocated to interest generally , while the amount allocated to principal .
5. A student takes out a $15,000 loan at an annual interest rate of 6% compounded monthly. The loan is to be repaid over 5 years. Calculate the monthly payment.
6. An amortization schedule shows that early loan payments consist of a larger proportion of principal than interest.
True
False
7. A mortgage of $250,000 is taken out at an annual interest rate of 4.5% compounded semi-annually, amortized over 25 years. Calculate the effective annual rate and the semi-annual payment.
8. Complete the first three rows of the amortization schedule for a loan of $10,000 at 5% annual interest, compounded annually, with annual payments of $2,309.75. (Assume the first payment is made at the end of Year 1).
Payment Number | Beginning Balance | Interest Paid | Principal Paid | Ending Balance
1 | $10,000.00 | | |
2 | | | |
3 | | | |