Question

A debt of $17,000 with interest at 7.2%p.a compounding quarterly is to be repaid with 9 equal end-of-quarter payments.

How much interest is in the final instalment?

(Hint use excel: You can either:

-       First calculate the loan outstanding at the beginning of the last quarter. The interest can then be calculated as if you were setting up a loan repayment schedule for the final quarter.

-       Use IPMT function)

Answer 1

Interest in the final installment is 36.48

Payment	Loan beginning balance	Payment	Interest payment	Principal payment	Loan ending balance
1	17000	$2,062.93	$306.00	$1,756.93	$15,243.07
2	$15,243.07	$2,062.93	$274.38	$1,788.56	$13,454.51
3	$13,454.51	$2,062.93	$242.18	$1,820.75	$11,633.76
4	$11,633.76	$2,062.93	$209.41	$1,853.52	$9,780.24
5	$9,780.24	$2,062.93	$176.04	$1,886.89	$7,893.35
6	$7,893.35	$2,062.93	$142.08	$1,920.85	$5,972.50
7	$5,972.50	$2,062.93	$107.51	$1,955.43	$4,017.08
8	$4,017.08	$2,062.93	$72.31	$1,990.62	$2,026.45
9	$2,026.45	$2,062.93	$36.48	$2,026.45	$0.00