Question

Loan of $10000 with interest at j4 = 12%, is to be amortized by equal payments at the end of each quarter over a period of 30 quarters. Using the Retrospective Method, Determine the outstanding balance at the end of 12 quarters

Answer #1

Solution:-

**First we need to calculate Quarterly Rate-**

Quarterly Rate =

**Quarterly Rate = 3%**

**To Calculate Quarterly Payment-**

Quarterly Payment =

Quarterly Payment =

**Quarterly** **Payment =
$510.19**

**Outstanding Installement After 12 Quarterly**
**payment = 30 - 12 = 18 Installment.**

Now, The Outstanding balance after 12 Quarterly Payment is = Present Value of 18 Intstallment

Present Value of 18 Installment = Installment Amount * PVAF (r, n)

Present Value of 18 Installment = $510.19 * PVAF(3%, 18)

**Present Value of 18 Installment = $7,016.90**

**The Outstanding Principal after paying 12 quarterly
payment is $7,016.90**

If you have any query related to question then feel free to ask me in a comment.Thanks.

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