Answer to Question #193966 in Financial Math for King

Question

Activity: Amortization Payment

4.   UCPB is offering mortgages at 9% interest. What

monthly payments would be required to amortize a loan of P2,000,000 for 15

years?

5. A debt of P40,000 is to be amortized by equal

payments at the end of every quarter for 1 ½ years. If the interest charged is

12% compounded quarterly, find the outstanding principal after each payment is

made. For this item, construct an amortization table.

Answer 1

4) r=9%,n=15,A=2000000

Using the formula-

$A=S\times \dfrac{r}{(1+r)^n-1}\\[9pt]\Rightarrow 2000000=S\times \dfrac{0.09}{(1+0.09)^{15}-1}\\[9pt]\Rightarrow 2000000=S\times \dfrac{0.09}{2.642}\\[9pt]\Rightarrow S=2000000\times \dfrac{2.642}{0.09}=58711111.11$

Hence Monthly payment is 58711111.11

5) Calculate quarterly payment for debt as shown below:

Quarterly payment $А=S×( \dfrac{r}{ (1+r) ^n−1})$

Quarterly rate 3.00% 12%/4

No of payments 6 1.5*4

Quarterly payment

$=\dfrac{ 4000}{(1+0 .03)^6-1)} \\[9pt] =\dfrac{ 40000}{5.4172}$

=7383.92

Prepare amortization table as shown below: