Question

Suppose you take out a loan of $ 20,000 now (n=0), with an annual interest rate...

Suppose you take out a loan of $ 20,000 now (n=0), with an annual interest rate of 12 % compounded monthly (LIP = one month). The loan has to be paid back in 12 end-of-month payments, with the first payment made one month from now. The monthly payment is $ 1,776.00. What is the interest payment included in the sixth payment ？

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Answer #1

Please find the amortization schedule with formulas

Periods Opening Balance Monthly fixed payment Interest amount=(Opening Balance*1%) Principal amount=Monthly payment-Interest Ending Balance=Opening Balance-Principal
1 20000.00 1776.98 200.00 1576.98 18423.02
2 18423.02 1776.98 184.23 1592.75 16830.28
3 16830.28 1776.98 168.30 1608.67 15221.61
4 15221.61 1776.98 152.22 1624.76 13596.85
5 13596.85 1776.98 135.97 1641.01 11955.84
6 11955.84 1776.98 119.56 1657.42 10298.42
7 10298.42 1776.98 102.98 1673.99 8624.43
8 8624.43 1776.98 86.24 1690.73 6933.70
9 6933.70 1776.98 69.34 1707.64 5226.06
10 5226.06 1776.98 52.26 1724.72 3501.34
11 3501.34 1776.98 35.01 1741.96 1759.38
12 1759.38 1776.98 17.59 1759.38 0.00

The interest payment included in 6th payment=$119.56

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