Question

Monica bought a $2000 4K Ultra HD TV for 15% down, with the balance to be paid with interest at 14% compounded monthly in six equal monthly payments. Construct the full amortization schedule for the debt. Calculate the total interest paid. (Do not round intermediate calculations. Round your answers to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required.)

Answer 1

Solution:

Loan Amount=$2000*(1-0.15)=$1700

Monthly interest rate(r)=0.14/12=0.012

no. of payment(n)=6

Monthly payment=Loan Amount[r(1+r)^n/(1+r)^n-1]

=$1700[0.012(1+0.012)^6/(1+0.012)^6-1]

=$295

Amortzation schedule

No. of payment	Opening balance	Monthly payment	Interest	Principal	Closing balance
1	$1700	$295	$19.83	275.17	$1424.83
2	$1424.83	$295	$16.62	$278.38	$1146.45
3	$1146.45	$295	$13.38	$281.62	$864.83
4	$864.83	$295	$10.09	$284.91	$579.92
5	$579.92	$295	$6.77	$288.23	$291.65
6	$291.65	$295	$3.4	$291.65	0

Total Interest paid=($295*6)-$1700

=$70