A borrower takes out a 10-year loan of 1000 at 8% compounded quarterly. The borrower makes...
A borrower takes out a 10-year loan of 1000 at 8% compounded quarterly. The borrower makes quarterly payments. Calculate the amount of principal paid in the ninth payment.
Homework Answers
Calculating Quarterly Payment,
using TVM calculation,
PMT = [PV = 1,000, FV = 0, N = 40, I = 0.08/4]
PMT = $36.56
Calculating Loan Balance after 8th Payment,
FV = [PV = 1,000, PMT = -36.56, N = 8, I = 0.08/4]
FV = $857.87
Interest Payment in 9th Payment = (0.08/4)(857.87) = $17.16
Principal Payment in 9th Payment = 36.56 - 17.16
Principal Payment in 9th Payment = $19.40
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