Question

Chapter 22 - Loan Amortization

Healthcare organizations often find themselves taking out loans to purchase high cost items such as CAT scanners. So, understanding the cost of a loan is essential. Compute the first six months of a loan amortization schedule with a principal balance of 60,000, an interest rate of ten percent, and a payment period of three years or thirty-six months.

Loan Amortization Schedule

Principal borrowed: 60,000

Total payments: 36

Annual interest rate 10.00% (monthly rate = 0.8333%)

Payment #	Total Payment	Principal Portion of Payment	Interest Expense Portion of Payment	Remaining Principal Balance
Beginning balance =				60,000.00
1
2
3
4
5
6

Answer 1

Monthly payment is given by

Monthly Payment=60000*(A/P,0.08333,36)

Let us calculate the interest factor

So,

Monthly Payment=60000*0.032267=$1936.02

Payment #	Total Payment, TP	Principal Portion of Payment, PP	Interest Portion of Payment, IP= B*0.8333%	Remaining Principal Balance, B
Beginning Balance------->				60000.00
1	1936.02	1436.04	499.98	58563.96
2	1936.02	1448.01	488.01	57115.95
3	1936.02	1460.07	475.95	55655.88
4	1936.02	1472.24	463.78	54183.64
5	1936.02	1484.51	451.51	52699.13
6	1936.02	1496.88	439.14	51202.26
7	1936.02	1509.35	426.67	49692.90
8	1936.02	1521.93	414.09	48170.97
9	1936.02	1534.61	401.41	46636.36
10	1936.02	1547.40	388.62	45088.96
11	1936.02	1560.29	375.73	43528.67
12	1936.02	1573.30	362.72	41955.37
13	1936.02	1586.41	349.61	40368.97
14	1936.02	1599.63	336.39	38769.34
15	1936.02	1612.96	323.06	37156.39
16	1936.02	1626.40	309.62	35529.99
17	1936.02	1639.95	296.07	33890.04
18	1936.02	1653.61	282.41	32236.43
19	1936.02	1667.39	268.63	30569.04
20	1936.02	1681.29	254.73	28887.75
21	1936.02	1695.30	240.72	27192.45
22	1936.02	1709.43	226.59	25483.02
23	1936.02	1723.67	212.35	23759.35
24	1936.02	1738.03	197.99	22021.32
25	1936.02	1752.52	183.50	20268.80
26	1936.02	1767.12	168.90	18501.68
27	1936.02	1781.85	154.17	16719.84
28	1936.02	1796.69	139.33	14923.15
29	1936.02	1811.67	124.35	13111.48
30	1936.02	1826.76	109.26	11284.72
31	1936.02	1841.98	94.04	9442.73
32	1936.02	1857.33	78.69	7585.40
33	1936.02	1872.81	63.21	5712.59
34	1936.02	1888.42	47.60	3824.17
35	1936.02	1904.15	31.87	1920.02
36	1936.02	1920.02	16.00	0.00