Question

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

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)

Homework Answers

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
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