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majarm majarm
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7 years ago
Barbara borrowed $12 000.00 from the bank at 9% compounded monthly. The loan is amortized with end-of-month payments over five years.
a) Calculate the interest included in the 20th payment.
b) Calculate the principal repaid in the 36th payment.
c) Construct a partial amortization schedule showing the details of the first two payments, the 20th payment, the 36th payment, and the last two payments.
d) Calculate the totals of amount paid, interest paid, and the principal repaid.
Textbook 
Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
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#1
7 years ago
a)    PV = 12 000.00; n = 5(12) = 60; i =   = 0.75% = 0.0075; I/Y = 9; P/Y = C/Y = 12;
   12000 = PMT 
   12000 = PMT[48.17337352]
   PMT = 
   PMT = $249.10

Programmed solution:

The outstanding balance after the 19th payment:
PV = 249.10  = $8764.10

Programmed solution:

The interest paid in the 20th payment is 8764.10(0.0075) = $65.73

b)    The outstanding balance after the 35th payment:
   PV = 249.10  = $5659.24
Programmed solution:

The interest included in Payment 36 is 5659.24(0.0075) = $42.44
The principal repaid by Payment 36 is 249.10 - 42.44 = $206.66


c)    The outstanding balance after Payment 58:
   PV = 249.10  = $492.65
Programmed solution:

The principal repaid is $12 000.00.
The total amount paid is 249.10(59) + 249.09 = $14 945.99
The total interest paid is 14 945.99 - 12000.00 = $2945.99

Partial Amortization Schedule: (rounded to the nearest cent):
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