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In this video tutorial, the presenter explains how to prepare an amortization schedule, a practical application of the present value of an annuity. Key terms introduced include principal (the original loan amount) and interest (the lender's charge). The video focuses specifically on amortized loans, where both principal and interest are paid in equal installments over time, contrasting this with other loan types, like discount loans, where the full amount is repaid at maturity. The amortization schedule details annual interest expenses, principal reduction, and the remaining balance for the loan. The tutorial then transitions into a practical exercise.