A loan is repaid with 10 annual payments of 1,295.05 with the first payment 1 year after the loan is issued. The loan rate is an annual effective rate of 5%. The interest portion of payment t is 328.67. Determine t.
First we find the loan amount or principal=PV(5%,10,-1295.05)=10000
Now we see the amortization schedule to find t..We get t=5
| Payment | Loan beginning balance | Payment | Interest payment | Principal payment | Loan ending balance |
| 1 | 10000 | $1,295.05 | $500.00 | $795.05 | $9,204.95 |
| 2 | $9,204.95 | $1,295.05 | $460.25 | $834.80 | $8,370.16 |
| 3 | $8,370.16 | $1,295.05 | $418.51 | $876.54 | $7,493.62 |
| 4 | $7,493.62 | $1,295.05 | $374.68 | $920.36 | $6,573.25 |
| 5 | $6,573.25 | $1,295.05 | $328.66 | $966.38 | $5,606.87 |
| 6 | $5,606.87 | $1,295.05 | $280.34 | $1,014.70 | $4,592.17 |
| 7 | $4,592.17 | $1,295.05 | $229.61 | $1,065.44 | $3,526.73 |
| 8 | $3,526.73 | $1,295.05 | $176.34 | $1,118.71 | $2,408.02 |
| 9 | $2,408.02 | $1,295.05 | $120.40 | $1,174.64 | $1,233.38 |
| 10 | $1,233.38 | $1,295.05 | $61.67 | $1,233.38 | $0.00 |
Get Answers For Free
Most questions answered within 1 hours.