Question

You are considering taking out a loan of $11,000.00 that will be paid back over 10 years with quarterly payments. If the interest rate is 5.6% compounded quarterly, what would the unpaid balance be immediately after the thirteenth payment?

The Unpaid balance would be $ (Round to 2 decimal places.)

Answer 1

Number of quarters in 10 years = 10*4 = 40 quarters
Interest rate per quarter = 5.6/4 = 1.4%
Equal Quarterly instalments = $11000/[(1/(1.014^1))+(1/(1.014^2))+………+(1/(1.014^40))]
= $11000/30.46915
= $361.02

Instalment No	Opening Balance	Interest @ 1.4%	Principal portion	Closing Balance
1	$11,000.00	$154.00	$207.02	$10,792.98
2	$10,792.98	$151.10	$209.92	$10,583.06
3	$10,583.06	$148.16	$212.86	$10,370.20
4	$10,370.20	$145.18	$215.84	$10,154.37
5	$10,154.37	$142.16	$218.86	$9,935.51
6	$9,935.51	$139.10	$221.92	$9,713.59
7	$9,713.59	$135.99	$225.03	$9,488.56
8	$9,488.56	$132.84	$228.18	$9,260.38
9	$9,260.38	$129.65	$231.37	$9,029.00
10	$9,029.00	$126.41	$234.61	$8,794.39
11	$8,794.39	$123.12	$237.90	$8,556.49
12	$8,556.49	$119.79	$241.23	$8,315.26
13	$8,315.26	$116.41	$244.61	$8,070.65

Therefore, the unpaid balance after 13th payment would be $8070.65.