Question

A 20 year loan is repaid by a decreasing annuity of 20, 19, 18, 17, ...., 3, 2, 1, and payments are made at the end of each year. The annual effectuve interest rate is 7%. Determine the row of an amortization table associated with the 11th payment.

Answer 1

Payment

Loan beginning balance

Payment

Interest payment

Principal payment

Loan ending balance

11

$42.52

$10.00

$2.98

$7.02

$35.50

Complete Amortization schedule

Principal=20/1.07+19/1.07^2...................=134.3712251

Payment	Loan beginning balance	Payment	Interest payment	Principal payment	Loan ending balance
1	134.3712251	$20.00	$9.41	$10.59	$123.78
2	$123.78	$19.00	$8.66	$10.34	$113.44
3	$113.44	$18.00	$7.94	$10.06	$103.38
4	$103.38	$17.00	$7.24	$9.76	$93.62
5	$93.62	$16.00	$6.55	$9.45	$84.17
6	$84.17	$15.00	$5.89	$9.11	$75.06
7	$75.06	$14.00	$5.25	$8.75	$66.32
8	$66.32	$13.00	$4.64	$8.36	$57.96
9	$57.96	$12.00	$4.06	$7.94	$50.02
10	$50.02	$11.00	$3.50	$7.50	$42.52
11	$42.52	$10.00	$2.98	$7.02	$35.50
12	$35.50	$9.00	$2.48	$6.52	$28.98
13	$28.98	$8.00	$2.03	$5.97	$23.01
14	$23.01	$7.00	$1.61	$5.39	$17.62
15	$17.62	$6.00	$1.23	$4.77	$12.85
16	$12.85	$5.00	$0.90	$4.10	$8.75
17	$8.75	$4.00	$0.61	$3.39	$5.37
18	$5.37	$3.00	$0.38	$2.62	$2.74
19	$2.74	$2.00	$0.19	$1.81	$0.93
20	$0.93	$1.00	$0.07	$0.93	$0.00