Questions: EA1. LO 13.1 Halep Inc. borrowed 30,000 from Davis Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Halep Inc. will make payments of 8,264.70 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.

To create an amortization table for Halep Inc.'s loan, we need to break down each annual payment into the portion that goes toward interest and the portion that reduces the principal. The loan amount is $30,000, the interest rate is 4% compounded annually, and the annual payment is $8,264.70. The loan term is 4 years.

1. Year 1:

   • Beginning Balance: $30,000
   • Interest for the Year: $30,000 * 0.04 = $1,200
   • Total Payment: $8,264.70
   • Principal Payment: $8,264.70 - $1,200 = $7,064.70
   • Ending Balance: $30,000 - $7,064.70 = $22,935.30

2. Year 2:

   • Beginning Balance: $22,935.30
   • Interest for the Year: $22,935.30 * 0.04 = $917.41
   • Total Payment: $8,264.70
   • Principal Payment: $8,264.70 - $917.41 = $7,347.29
   • Ending Balance: $22,935.30 - $7,347.29 = $15,588.01

3. Year 3:

   • Beginning Balance: $15,588.01
   • Interest for the Year: $15,588.01 * 0.04 = $623.52
   • Total Payment: $8,264.70
   • Principal Payment: $8,264.70 - $623.52 = $7,641.18
   • Ending Balance: $15,588.01 - $7,641.18 = $7,946.83

4. Year 4:

   • Beginning Balance: $7,946.83
   • Interest for the Year: $7,946.83 * 0.04 = $317.87
   • Total Payment: $8,264.70
   • Principal Payment: $8,264.70 - $317.87 = $7,946.83
   • Ending Balance: $7,946.83 - $7,946.83 = $0

• Total Interest Paid Over 4 Years: $1,200 + $917.41 + $623.52 + $317.87 = $3,058.80
• Total Principal Paid Over 4 Years: $30,000

This table shows how each payment is divided between interest and principal, and how the principal balance decreases over the term of the loan. The loan is fully amortized by the end of the fourth year, with the balance reaching zero.