Question

Assume the following information for a home mortgage: Original loan amount = $250,000 Annual interest rate = 7.35% Term of loan = 10 years For year two, how much interest and principal was paid, and what is the balance due at the end of year two? using financial calculator.

answer:

$18,922.69 of principal; $16,453.43 of interest; balance due $213,491.61

Answer 1

Instalment = Loan / PVAF(r%, n)

= $ 250,000 / PVAF(7.35%,10)

= $ 250,000 / 6.9113

= $ 36712.42

Loan Amortization:

Year	opening Bal	Instalment	Int	Principal Repay	Clsoing Bal
1	$ 2,50,000.00	$ 36,172.42	$ 18,375.00	$ 17,797.42	$ 2,32,202.58
2	$ 2,32,202.58	$ 36,172.42	$ 17,066.89	$ 19,105.53	$ 2,13,097.05
3	$ 2,13,097.05	$ 36,172.42	$ 15,662.63	$ 20,509.79	$ 1,92,587.26
4	$ 1,92,587.26	$ 36,172.42	$ 14,155.16	$ 22,017.26	$ 1,70,570.00
5	$ 1,70,570.00	$ 36,172.42	$ 12,536.89	$ 23,635.53	$ 1,46,934.47
6	$ 1,46,934.47	$ 36,172.42	$ 10,799.68	$ 25,372.74	$ 1,21,561.73
7	$ 1,21,561.73	$ 36,172.42	$   8,934.79	$ 27,237.64	$    94,324.10
8	$    94,324.10	$ 36,172.42	$   6,932.82	$ 29,239.60	$    65,084.49
9	$    65,084.49	$ 36,172.42	$   4,783.71	$ 31,388.71	$    33,695.78
10	$    33,695.78	$ 36,172.42	$   2,476.64	$ 33,695.78	$              0.00

For Year 2 - Int is 17066.89

Principal repay is 19105.53

balance due after 2 years is $ 2,13,097.05