The following loan is fully amortizing. The loan is for $13,000 at 9% interest to be...

The following loan is fully amortizing. The loan is for $13,000 at 9% interest to be repaid over three (3) years. Amortize this loan on a monthly basis. Calculate the interest portion of the fourth (4th) payment considering that an additional payment of $2,000 was made with the second payment.

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Expert Solution

First calculate monthly payment:

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate = 9/12 =	0.750000
FV = Future value =	$0
N = Total payment term = 12 x 3 Years =	36
PV = Present value of loan =	-$13,000
CPT > PMT = Monthly Payment =	$413.40

Amortization schedule:

Year	Beginning Balance	Payment	Interest	Repayment of principal	Additional payment	Ending balance
Y	OP	PMT	I = OP x 9%/12	AM = PMT - I	AP	CB = OP-AM-AP
1	$13,000.00	$413.40	97.50	$315.90		$12,684.10
2	12,684.10	$413.40	95.13	$318.27	$2,000.00	$10,365.84
3	10,365.84	$413.40	77.74	$335.65		$10,030.18
4	10,030.18	$413.40	75.23	338.17		$9,692.01

Interest portion of the fourth payment = $75.23

jeff jeffy answered 2 years ago

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