Homework Answers
Annaual Instalment = Loan AMount / PVAF(r%, n)
PVAF(r%, n) = SUm of PVF(r%, n)
PVF(r%,n) = 1 / (1+r)^n
r = int rate and n is time period
Annaual Instalment = Loan AMount / PVAF(r%, n)
= $ 60,000 / PVAF(10%, 8)
= $ 60,000 / 5.3349
= $ 11,246.64
Loan Amortization:
| Year | Opening Bal | Annual Payment | Int | Principal repay | Ending Balance |
| 1 | $ 60,000.00 | $ 11,246.64 | $ 6,000.00 | $ 5,246.64 | $ 54,753.36 |
| 2 | $ 54,753.36 | $ 11,246.64 | $ 5,475.34 | $ 5,771.30 | $ 48,982.06 |
| 3 | $ 48,982.06 | $ 11,246.64 | $ 4,898.21 | $ 6,348.43 | $ 42,633.62 |
| 4 | $ 42,633.62 | $ 11,246.64 | $ 4,263.36 | $ 6,983.28 | $ 35,650.34 |
| 5 | $ 35,650.34 | $ 11,246.64 | $ 3,565.03 | $ 7,681.61 | $ 27,968.74 |
| 6 | $ 27,968.74 | $ 11,246.64 | $ 2,796.87 | $ 8,449.77 | $ 19,518.97 |
| 7 | $ 19,518.97 | $ 11,246.64 | $ 1,951.90 | $ 9,294.74 | $ 10,224.23 |
| 8 | $ 10,224.23 | $ 11,246.64 | $ 1,022.42 | $ 10,224.22 | $ 0.01 |
Part B:
Year 1 Int - $ 6000
Year 1 Principal Repay - $ 5246.64
Part C:
Year 2 Int - $ 5475.34
Year 2 Principal Repay - $ 5771.30
Pls comment, if any further assistance is required.
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