Homework Answers
a. Nominal Interest = {$20765.88 - ($15000-$1000)}/($14000*4 years) = 12.08% p.a.
b. Effective Interest rate = 1.332% p.m (refer working note)
c. Principal is $362.9558 and interest is $213.8741 in 14th month's payment.
d. Principal is $382.690052742658 and interest is $194.1399 in 18th month's payment.
e. Principal is $403.4971 and interest is $173.3328 in 22th month's payment.
| Month | Opening Balance | Payment | Interest | Principal Paid | Closing Balance |
| A | B | C = A*1.3324% | D = B-C | A-B+C | |
| 0 | 15,000 | 1,000 | - | 1,000 | 14,000 |
| 1 | 14,000 | - | 186.5360 | - | 14,186.5360 |
| 2 | 14,186.5360 | - | 189.0214 | - | 14,375.5574 |
| 3 | 14,375.5574 | - | 191.5399 | - | 14,567.0973 |
| 4 | 14,567.0973 | - | 194.0920 | - | 14,761.1893 |
| 5 | 14,761.1893 | - | 196.6781 | - | 14,957.8674 |
| 6 | 14,957.8674 | - | 199.2986 | - | 15,157.1660 |
| 7 | 15,157.1660 | - | 201.9541 | - | 15,359.1201 |
| 8 | 15,359.1201 | - | 204.6449 | - | 15,563.7650 |
| 9 | 15,563.7650 | - | 207.3716 | - | 15,771.1367 |
| 10 | 15,771.1367 | - | 210.1346 | - | 15,981.2713 |
| 11 | 15,981.2713 | - | 212.9345 | - | 16,194.2057 |
| 12 | 16,194.2057 | - | 215.7716 | - | 16,409.9773 |
| 13 | 16,409.9773 | 576.8300 | 218.6465 | 358.1835 | 16,051.7939 |
| 14 | 16,051.7939 | 576.8300 | 213.8741 | 362.9559 | 15,688.8380 |
| 15 | 15,688.8380 | 576.8300 | 209.0381 | 367.7919 | 15,321.0460 |
| 16 | 15,321.0460 | 576.8300 | 204.1376 | 372.6924 | 14,948.3537 |
| 17 | 14,948.3537 | 576.8300 | 199.1719 | 377.6581 | 14,570.6955 |
| 18 | 14,570.6955 | 576.8300 | 194.1399 | 382.6901 | 14,188.0055 |
| 19 | 14,188.0055 | 576.8300 | 189.0410 | 387.7890 | 13,800.2165 |
| 20 | 13,800.2165 | 576.8300 | 183.8741 | 392.9559 | 13,407.2605 |
| 21 | 13,407.2605 | 576.8300 | 178.6383 | 398.1917 | 13,009.0689 |
| 22 | 13,009.0689 | 576.8300 | 173.3328 | 403.4972 | 12,605.5717 |
| 23 | 12,605.5717 | 576.8300 | 167.9566 | 408.8734 | 12,196.6984 |
| 24 | 12,196.6984 | 576.8300 | 162.5088 | 414.3212 | 11,782.3772 |
| 25 | 11,782.3772 | 576.8300 | 156.9884 | 419.8416 | 11,362.5356 |
| 26 | 11,362.5356 | 576.8300 | 151.3944 | 425.4356 | 10,937.1000 |
| 27 | 10,937.1000 | 576.8300 | 145.7259 | 431.1041 | 10,505.9959 |
| 28 | 10,505.9959 | 576.8300 | 139.9819 | 436.8481 | 10,069.1478 |
| 29 | 10,069.1478 | 576.8300 | 134.1613 | 442.6687 | 9,626.4791 |
| 30 | 9,626.4791 | 576.8300 | 128.2632 | 448.5668 | 9,177.9123 |
| 31 | 9,177.9123 | 576.8300 | 122.2865 | 454.5435 | 8,723.3688 |
| 32 | 8,723.3688 | 576.8300 | 116.2302 | 460.5998 | 8,262.7690 |
| 33 | 8,262.7690 | 576.8300 | 110.0931 | 466.7369 | 7,796.0321 |
| 34 | 7,796.0321 | 576.8300 | 103.8743 | 472.9557 |
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