Assume you are to borrow money, the loan amount, at an annual interest rate to b
ID: 2524230 • Letter: A
Question
Assume you are to borrow money, the loan amount, at an annual interest rate to be paid in equal installments each period.
Installment Loan Schedule
Installment Loan Schedule
Loan Amount $25,000 Annual Interest Rate 9.90% Periods per year 12 Years to payback 5 See Table B.3 in book. Factor 47.17454194 FACTOR = [1 - (1 / ((1 + R)^n)]/ R Equal Payments $529.95 let R = period interest rate let n = number of periods to payback loan Number of periods: 60 Reduction Period Payment Interest Exp in Principal Principal Borrowed money $25,000.00Explanation / Answer
Answer
Period
Payment (A) [Installment amount = $529.95]
Interest Exp [B = (D x 9.9%)x1/12]
Reduction in Principal [C= A – B]
Borrowed money Principal [D = D – C]
$ 25,000.00
1
$ 529.95
$ 206.25
$ 323.70
$ 24,676.30
2
$ 529.95
$ 203.58
$ 326.37
$ 24,349.93
3
$ 529.95
$ 200.89
$ 329.06
$ 24,020.87
4
$ 529.95
$ 198.17
$ 331.78
$ 23,689.09
5
$ 529.95
$ 195.43
$ 334.52
$ 23,354.57
6
$ 529.95
$ 192.68
$ 337.27
$ 23,017.30
7
$ 529.95
$ 189.89
$ 340.06
$ 22,677.24
8
$ 529.95
$ 187.09
$ 342.86
$ 22,334.38
9
$ 529.95
$ 184.26
$ 345.69
$ 21,988.69
10
$ 529.95
$ 181.41
$ 348.54
$ 21,640.14
11
$ 529.95
$ 178.53
$ 351.42
$ 21,288.73
12
$ 529.95
$ 175.63
$ 354.32
$ 20,934.41
13
$ 529.95
$ 172.71
$ 357.24
$ 20,577.17
14
$ 529.95
$ 169.76
$ 360.19
$ 20,216.98
15
$ 529.95
$ 166.79
$ 363.16
$ 19,853.82
16
$ 529.95
$ 163.79
$ 366.16
$ 19,487.66
17
$ 529.95
$ 160.77
$ 369.18
$ 19,118.48
18
$ 529.95
$ 157.73
$ 372.22
$ 18,746.26
19
$ 529.95
$ 154.66
$ 375.29
$ 18,370.97
20
$ 529.95
$ 151.56
$ 378.39
$ 17,992.58
21
$ 529.95
$ 148.44
$ 381.51
$ 17,611.07
22
$ 529.95
$ 145.29
$ 384.66
$ 17,226.41
23
$ 529.95
$ 142.12
$ 387.83
$ 16,838.58
24
$ 529.95
$ 138.92
$ 391.03
$ 16,447.55
25
$ 529.95
$ 135.69
$ 394.26
$ 16,053.29
26
$ 529.95
$ 132.44
$ 397.51
$ 15,655.78
27
$ 529.95
$ 129.16
$ 400.79
$ 15,254.99
28
$ 529.95
$ 125.85
$ 404.10
$ 14,850.89
29
$ 529.95
$ 122.52
$ 407.43
$ 14,443.46
30
$ 529.95
$ 119.16
$ 410.79
$ 14,032.67
31
$ 529.95
$ 115.77
$ 414.18
$ 13,618.49
32
$ 529.95
$ 112.35
$ 417.60
$ 13,200.89
33
$ 529.95
$ 108.91
$ 421.04
$ 12,779.85
34
$ 529.95
$ 105.43
$ 424.52
$ 12,355.33
35
$ 529.95
$ 101.93
$ 428.02
$ 11,927.31
36
$ 529.95
$ 98.40
$ 431.55
$ 11,495.76
37
$ 529.95
$ 94.84
$ 435.11
$ 11,060.66
38
$ 529.95
$ 91.25
$ 438.70
$ 10,621.96
39
$ 529.95
$ 87.63
$ 442.32
$ 10,179.64
40
$ 529.95
$ 83.98
$ 445.97
$ 9,733.67
41
$ 529.95
$ 80.30
$ 449.65
$ 9,284.02
42
$ 529.95
$ 76.59
$ 453.36
$ 8,830.66
43
$ 529.95
$ 72.85
$ 457.10
$ 8,373.57
44
$ 529.95
$ 69.08
$ 460.87
$ 7,912.70
45
$ 529.95
$ 65.28
$ 464.67
$ 7,448.03
46
$ 529.95
$ 61.45
$ 468.50
$ 6,979.53
47
$ 529.95
$ 57.58
$ 472.37
$ 6,507.16
48
$ 529.95
$ 53.68
$ 476.27
$ 6,030.89
49
$ 529.95
$ 49.75
$ 480.20
$ 5,550.70
50
$ 529.95
$ 45.79
$ 484.16
$ 5,066.54
51
$ 529.95
$ 41.80
$ 488.15
$ 4,578.39
52
$ 529.95
$ 37.77
$ 492.18
$ 4,086.21
53
$ 529.95
$ 33.71
$ 496.24
$ 3,589.97
54
$ 529.95
$ 29.62
$ 500.33
$ 3,089.64
55
$ 529.95
$ 25.49
$ 504.46
$ 2,585.18
56
$ 529.95
$ 21.33
$ 508.62
$ 2,076.55
57
$ 529.95
$ 17.13
$ 512.82
$ 1,563.74
58
$ 529.95
$ 12.90
$ 517.05
$ 1,046.69
59
$ 529.95
$ 8.64
$ 521.31
$ 525.37
60
$ 529.95
$ 4.33
$ 525.62
$ (0.24)
Period
Payment (A) [Installment amount = $529.95]
Interest Exp [B = (D x 9.9%)x1/12]
Reduction in Principal [C= A – B]
Borrowed money Principal [D = D – C]
$ 25,000.00
1
$ 529.95
$ 206.25
$ 323.70
$ 24,676.30
2
$ 529.95
$ 203.58
$ 326.37
$ 24,349.93
3
$ 529.95
$ 200.89
$ 329.06
$ 24,020.87
4
$ 529.95
$ 198.17
$ 331.78
$ 23,689.09
5
$ 529.95
$ 195.43
$ 334.52
$ 23,354.57
6
$ 529.95
$ 192.68
$ 337.27
$ 23,017.30
7
$ 529.95
$ 189.89
$ 340.06
$ 22,677.24
8
$ 529.95
$ 187.09
$ 342.86
$ 22,334.38
9
$ 529.95
$ 184.26
$ 345.69
$ 21,988.69
10
$ 529.95
$ 181.41
$ 348.54
$ 21,640.14
11
$ 529.95
$ 178.53
$ 351.42
$ 21,288.73
12
$ 529.95
$ 175.63
$ 354.32
$ 20,934.41
13
$ 529.95
$ 172.71
$ 357.24
$ 20,577.17
14
$ 529.95
$ 169.76
$ 360.19
$ 20,216.98
15
$ 529.95
$ 166.79
$ 363.16
$ 19,853.82
16
$ 529.95
$ 163.79
$ 366.16
$ 19,487.66
17
$ 529.95
$ 160.77
$ 369.18
$ 19,118.48
18
$ 529.95
$ 157.73
$ 372.22
$ 18,746.26
19
$ 529.95
$ 154.66
$ 375.29
$ 18,370.97
20
$ 529.95
$ 151.56
$ 378.39
$ 17,992.58
21
$ 529.95
$ 148.44
$ 381.51
$ 17,611.07
22
$ 529.95
$ 145.29
$ 384.66
$ 17,226.41
23
$ 529.95
$ 142.12
$ 387.83
$ 16,838.58
24
$ 529.95
$ 138.92
$ 391.03
$ 16,447.55
25
$ 529.95
$ 135.69
$ 394.26
$ 16,053.29
26
$ 529.95
$ 132.44
$ 397.51
$ 15,655.78
27
$ 529.95
$ 129.16
$ 400.79
$ 15,254.99
28
$ 529.95
$ 125.85
$ 404.10
$ 14,850.89
29
$ 529.95
$ 122.52
$ 407.43
$ 14,443.46
30
$ 529.95
$ 119.16
$ 410.79
$ 14,032.67
31
$ 529.95
$ 115.77
$ 414.18
$ 13,618.49
32
$ 529.95
$ 112.35
$ 417.60
$ 13,200.89
33
$ 529.95
$ 108.91
$ 421.04
$ 12,779.85
34
$ 529.95
$ 105.43
$ 424.52
$ 12,355.33
35
$ 529.95
$ 101.93
$ 428.02
$ 11,927.31
36
$ 529.95
$ 98.40
$ 431.55
$ 11,495.76
37
$ 529.95
$ 94.84
$ 435.11
$ 11,060.66
38
$ 529.95
$ 91.25
$ 438.70
$ 10,621.96
39
$ 529.95
$ 87.63
$ 442.32
$ 10,179.64
40
$ 529.95
$ 83.98
$ 445.97
$ 9,733.67
41
$ 529.95
$ 80.30
$ 449.65
$ 9,284.02
42
$ 529.95
$ 76.59
$ 453.36
$ 8,830.66
43
$ 529.95
$ 72.85
$ 457.10
$ 8,373.57
44
$ 529.95
$ 69.08
$ 460.87
$ 7,912.70
45
$ 529.95
$ 65.28
$ 464.67
$ 7,448.03
46
$ 529.95
$ 61.45
$ 468.50
$ 6,979.53
47
$ 529.95
$ 57.58
$ 472.37
$ 6,507.16
48
$ 529.95
$ 53.68
$ 476.27
$ 6,030.89
49
$ 529.95
$ 49.75
$ 480.20
$ 5,550.70
50
$ 529.95
$ 45.79
$ 484.16
$ 5,066.54
51
$ 529.95
$ 41.80
$ 488.15
$ 4,578.39
52
$ 529.95
$ 37.77
$ 492.18
$ 4,086.21
53
$ 529.95
$ 33.71
$ 496.24
$ 3,589.97
54
$ 529.95
$ 29.62
$ 500.33
$ 3,089.64
55
$ 529.95
$ 25.49
$ 504.46
$ 2,585.18
56
$ 529.95
$ 21.33
$ 508.62
$ 2,076.55
57
$ 529.95
$ 17.13
$ 512.82
$ 1,563.74
58
$ 529.95
$ 12.90
$ 517.05
$ 1,046.69
59
$ 529.95
$ 8.64
$ 521.31
$ 525.37
60
$ 529.95
$ 4.33
$ 525.62
$ (0.24)
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