Question

Create an amortization schedule for a 20-year, $200,000 loan at 7.5% interest with monthly payments.

1. During which payment number does the amount applied to the principal exceed the amount paid to interest?
2. True or False? After half of the time has passed in making payments, we also note that exactly half of the overall balance has been paid off. Explain.
3. After completing the schedule, show two different ways for finding the total amount of interest paid over the 20 years.

Answer 1

a) 133 Month payment principal would exceed the amount paid to Interest.

B) False, more than a half of the payment would be completed by 121st Month EMI which is $ 135771. reason because the EMI is constant from Start of month to end, principal portion is increasing and Interest part is decreasing.

C)

Month	Payment	Principal Paid	Interest Paid
1	$1,611	$361.00	$1,250.00
2	$1,611	$363.00	$1,248.00
3	$1,611	$366.00	$1,245.00
120 (10 years)	$1,611	$758.00	$853.00
180 (15 years)	$1,611	$1,101.00	$510.00
240 (20 years) Final	$1,611	$1,600.00	$11.00