8 loan amortization schedule 6000 principal 10

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Unformatted text preview: the year-4 principal payment (in column 4). Table Use Table A–4 indicates that the present value interest factor for an annuity corresponding to 10% and 4 years (PVIFA10%,4yrs) is 3.170. Substituting PVA4 $6,000 and PVIFA10%,4yrs 3.170 into Equation 4.25 and solving for PMT yield an annual loan payment of $1,892.74. Thus to repay the interest and principal on a $6,000, 10%, 4-year loan, equal annual end-of-year payments of $1,892.74 are necessary. Input 6000 Function PV 4 N 10 I CPT PMT Solution 1892.82 Calculator Use Using the calculator inputs shown at the left, you will find the annual payment amount to be $1,892.82. Except for a slight rounding difference, this value agrees with the table solution. The allocation of each loan payment to interest and principal can be seen in columns 3 and 4 of the loan amortization schedule in Table 4.8. The portion of each payment that represents interest (column 3) declines over the repayment period, and the portion going to principal repayment (...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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