The company has decided to get a three year loan to purchase a high end lathe for $1M. The current interest rate is 6%. Calculate the monthly interest payments by building a loan amortization table.

Module 02 modeling assignment – loan amortization table

A loan amortization table is a tool used to calculate the monthly interest payments on a loan. To build an amortization table, you will need to know the loan amount, interest rate, and term of the loan. In this case, the company is taking out a three-year loan for $1M at 6% interest. The monthly payment for this loan would be $31,385.58.

The amortization table provides information about each payment including principal and interest amounts paid as well as remaining balance after each payment. For example: in month one of the repayment period, $5,000 goes towards servicing the interest portion of the debt while $26,385.58 is allocated towards paying off principal; leaving a remaining balance of $973,614.42 after that first payment has been made.

As time progresses and more payments are made on both principal and interest portions of the debt obligation; then more money will go toward paying off principal than towards servicing just interest obligation – until eventually (at end of third year) all monies collected have been applied solely toward satisfying full balance owed which should now be zero or close to it by then.

An amortization table helps business owners stay organized while keeping track of their monthly obligations related to long-term financing instruments like loans – allowing them to make sure their lender’s contractual requirements are being met in timely fashion; thus helping maintain good credit rating with that lender or any other potential financiers they might seek out down road when seeking further funding opportunities such as expansion capital maybe?