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linyuki linyuki
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Table 14-1

Table 14.1  Amortization Payment Factors per $1,000 Borrowed  
      
    Amount of Monthly Payment per $1,000 Borrowed 
         
  Term of  Annual Interest Rate  
  Loan4.5%6%7.5%9%10.5%12%
1 month1003.750001005.000001006.250001007.500001008.750001010.00000
2 months502.81425503.75312504.69237505.63200506.57203507.51244
3 months335.83645336.67221337.50865338.34579339.18361340.02211
4 months252.34814253.13279253.91842254.70501255.49257256.28109
5 months202.25561203.00997203.76558204.52242205.28049206.03980
6 months168.86099169.59546170.33143171.06891171.80789172.54837
         
1 year85.3785286.0664386.7574287.4514888.1486088.84879
2 years43.6478144.3206144.9995945.6847446.3760447.07347
3 years29.7469230.4219431.1062231.7997332.5024433.21431
4 years22.8034923.4850324.1789024.8850425.6033826.33384
5 years18.6430219.3328020.0379520.7583621.4939022.24445
10 years10.3638411.1020511.8701812.6675813.4935014.34709
15 years7.649938.438579.2701210.1426711.0539912.00168
20 years6.326497.164318.055938.997269.9838011.01086
25 years5.558326.443017.389918.391969.4418210.53224
30 years5.066855.995516.992158.046239.1473910.28613



Eric Russell borrowed $2,400 from a financial loan company which amortized the loan at 12% over 3 months. Using Table 14-1, the first two monthly payments are $816.05. (The last payment may be slightly different.) Complete the amortization schedule and solve the effective rate problem.

  UnpaidInterestTotalPrincipalNew
 
Month
BalancePaymentPaymentPaymentBalance
a.
1
____________$816.05____________
b.
2
____________$816.05____________
c.
3
______________________________
  
d.Use Russell's amortization schedule to compute the approximate effective interest rate using
  
 pr027-1.jpg
  
 where P is the average principal over the 3-month period, I is the total amount of interest, and T is 3/12 year.
Textbook 
Contemporary Business Mathematics for Colleges

Contemporary Business Mathematics for Colleges


Edition: 16th
Authors:
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micp3537micp3537
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More solutions for this book are available here

a.Interest Payment: $2,400 ´ 0.01 = $24.00
 Principal Payment: $816.05 - $24.00 = $792.05
 New Balance: $2,400.00 - $792.05 = $1,607.95
  
b.Interest Payment: $1,607.95 ´ 0.01 = $16.08
 Principal Payment: $816.05 - $16.08 = $799.97
 New Balance: $1,607.95 - $799.97 = $807.98
  
c.Interest Payment: $807.98 ´ 0.01 = $8.08
 Total Payment: $807.98 + $8.08 = $816.06
 Principal Payment: $807.98
 New Balance: $807.98 - $807.98 = $0
  
d.P = ($2,400 + $1,607.95 + $807.98) ¸ 3 = $1,605.31
 I = $24.00 + $16.08 + $8.08 = $48.16
 R = $48.16 ¸ ($1,605.31 ´ 3/12) = 0.12000 = 12%
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linyuki Author
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A week ago
I appreciate what you did here, answered it right Smiling Face with Open Mouth
sudenzia
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Yesterday
Thanks for your help!!
Cdfields
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2 hours ago
Thank you, thank you, thank you!
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