A $15,000 debt is to be amortized in 12 equal semiannual payments at 5.5% interest per half-year on the unpaid balance. Construct an amortization table to determine the unpaid balance after two payments have been made. Round values in the table to the nearest cent.

Answer 1

The formula for calculating the payment amount is shown below.

A = P * ((r(1+r)^n)/(((1+r)^n)-1)
Simple Amortization Calculation Formula
where

A = payment Amount per period
P = initial Principal (loan amount)
r = interest rate per period
n = total number of payments or periods

A = 15000 * ((0.055(1.055)^12)/(((1.055)^12) - 1)

A = 15000 * ((0.055*1.9012)/.9012)

A = 1,740.44

Year 1, first payment: $1740.44 Interest paid = balance * 0.055 = $15000*.055 = $825
Principal paid = payment - interest = $ 1740.44 - 825 = 915.00
Balance = 15000 - 915 = 14085

Year 1, 2nd payment: $1740.44
Interest paid = balance * 0.055 = $14085*.055 = $774.68
Principal paid = payment - interest = $ 1740.44 - 774.68 = 965.76
Balance = 14085 - 965.76 = 13119

13119 is the unpaid balance after 2 payments.

Answer 2

A debt of $5000 is to be amortized with 6 equal semiannual payments. If the interest rate is 9%, compounded semiannually, what is the size of each payment