Question
a math student borrowed $9300.00 from his local bank at 7% compounded quarterly to pay for his studies. the loan is to be repaid by equal payments at the end of every quarter over a two year term.
a)construct the amortization schedule for the loan.
b)calculate the total interest.
a)construct the amortization schedule for the loan.
b)calculate the total interest.
Answers
first find the payment, let it be p
9000 = p (1 - 1.0175^-8)/.0175
I get p = 1215.39
make the following columns, (or follow your notes or text)
Time -- p (payment) -- interest -- repayment -- Balance
here are my first 3 rows, notice they don't line up
I will use 0 for "Now" , at now we don't have any payments or interest yet, the "time" would be in quarter years
0 0 0 0 9000
1 1215.39 157.50 1057.89 7942.11
2 1215.39 138.99 1076.40 6865.71
3 1215.39 120.15 1095.24 5770.05
etc
I was off by 3 cents, due to round-off
b) add up the interest column
9000 = p (1 - 1.0175^-8)/.0175
I get p = 1215.39
make the following columns, (or follow your notes or text)
Time -- p (payment) -- interest -- repayment -- Balance
here are my first 3 rows, notice they don't line up
I will use 0 for "Now" , at now we don't have any payments or interest yet, the "time" would be in quarter years
0 0 0 0 9000
1 1215.39 157.50 1057.89 7942.11
2 1215.39 138.99 1076.40 6865.71
3 1215.39 120.15 1095.24 5770.05
etc
I was off by 3 cents, due to round-off
b) add up the interest column