Question

A
debt of 15,000 with interest at the rate of 20% cpd semi-annually,
is to be amortized by 5 equal payments at the end of each 6 months,
but the first payment is to be made after 3 years. Find the
semi-annual payment and construct the amortization schedule.

Answer #1

Nominal semi-annual interest = 20%/2 = 10%

Loan amount (P) = $15000

Time (n)= 5 equal semi-annual installment ( first payment is at the end of year3)

Let, each semi-annual payment = X

Then

15000 = X/(1+10%)^6 + X/(1+10%)^7 + X/(1+10%)^8 + X/(1+10%)^9 + X/(1+10%)^10

15000 = X*(1/(1+10%)^6 + 1/(1+10%)^7 + 1/(1+10%)^8 + 1/(1+10%)^9 + 1/(1+10%)^10)

15000 = X*2.3538

X = 15000/2.3538

X= $6372.67

So, each six monthly installment will be $6372.67.

For loan amortization schedule:

Loan amount after 5 bi-annual period (2.5 years) = 15000*1.1^5 = $24157.65

R = 10%

Amortization schedule is as follows.

S.No.. | six monthly instalment | Interest paid | Principal paid | Loan amount left for the payment |

1 | 6372.67 | 2415.77 | 3956.91 | 20200.75 |

2 | 6372.67 | 2020.07 | 4352.60 | 15848.15 |

3 | 6372.67 | 1584.81 | 4787.86 | 11060.29 |

4 | 6372.67 | 1106.03 | 5266.64 | 5793.65 |

5 | 6372.67 | 579.37 | 5793.30 | 0.35 |

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is repaid by payments of $2,100
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Construct an amortization schedule showing the total paid and
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Complete the amortization schedule. (Round to the nearest cent
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Principal Repaid
Outstanding Principal Balance
0
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$
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