Question

You borrowed an X amount of money from a local bank to be repaid over Nmonths...

You borrowed an X amount of money from a local bank to be repaid over Nmonths at an interest rate i (assume your own numbers for X, i, N).

  1. Create a table (using Excel) showing each month’s interest in $ (I), principal repayment, and amount of principal remaining at the end of each month.
  2. Suppose that you decided to pay out the remaining principal all at once after few monthly payments (<N), how much will you pay? Use the P/A relationship to answer this part and compare to the numbers in the table you established in part (a).
Engineering   Civil-Engineering   
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Answer #1

total interest = $718.07

interst rate = 13%

part b ) payment is completed after 6 months of installments

          

therfore if we pay 12 months installments we have to pay a interest of $718.07

but if we pay six months of installlments and pay rest amount in one go then we have to pay net interest = $576.52

diffrence of interest = approx $142

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