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CTL (Concrete Testing Lab) borrowed $120,000 for new equipment at 11% per year, compounded quarterly. It...

CTL (Concrete Testing Lab) borrowed $120,000 for new equipment at 11% per year, compounded quarterly. It is to be paid back over 5 years in equal quarterly payments. How much interest is in the 6th payment? How much principal is in the 6th payment? What principal is owed immediately following the 6th payment?

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Answer #1
Amount borrowed 120000
Annual rate of interest =11%
Quarterly rate = 11/4 = 2.75%
Annuity pVF at 2.75% for 20 periods 15.22725
Quarterly payment 7880.6
Principal payment in 6th instalment 5246.04
(7880.6*PVF of 15th period i.e.0.665691)
Interst included in 6th payment 2634.56
(7880.6-5246.04)
Annuity PVF at 2.75% for 14 period 11.49101
Amount outstanding ahter 6th payment 90556.05
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