Loan Amortization;Mortgage loan amortization schedule参考.ppt

Chapter 14 Loan Amortization;Mortgage 14.2 loan amortization schedule Amortization Schedule An loan amortization schedule is a table that: Breaks down each payment into its interest and principal components. Gives the principal balance outstanding after each payment. Partial Amortization Schedule A particular circumstance may require only a portion of a loan’s amortization schedule. Example Marpole Carpet Cleaning borrowed $7000 from Richmond Credit Union at 12.5% compounded quarterly. The loan is to be repaid in equal quarterly payments over a 2-year term. Construct an amortization schedule for the loan. Calculate the total interest paid. Solution: j=12.5% compounded quarterly payment interval=3 months p=i=12.5%/4=3.125% per 3 months term= 2 years n=2*4=8 An=$7000 (1)interest portion=p*original principal =3.125%*$7000 =$218.75 (2)principal portion=R-interest portion =$1002.46-$218.75 =$783.71 (3)new principal balance=original principal -principal portion =$7000-$783.71 =$6216.29 (4)the principal portion in the last payment =previous principal balance =$972.08 (5) interest portion=p*previous principal balance =3.125%*$972.08 =$30.38 (6)final payment=interest portion+principal portion =$1002.46 (7)the total interest paid is the sum of interest portion. It is 1019.68 Example Martin obtained a 5-year term loan for $11,000 from his bank to purchase a new car. The blended monthly payments include interest at 11.25% compounded monthly. Construct a partial amortization schedule showing details of the first two payments, payments 32 and 33, and the last two payments. Calculate the total interest cha