what would be the principal ballon payment (that is excluding the fixed monthly payment) at the...

what would be the principal ballon payment (that is excluding the fixed monthly payment) at the end of 5 years on a $150,000 loan with monthly payments based on a 30-year term at 12 percent compounded monthly?

the answer is 146,495 but i dont know how to get this answer.

Solutions

Expert Solution

n=30*12=360
r=0.12/12=0.01
PV=150,000
USing excel to get payments:
=PMT(0.01,360,-150000,0)
=$1,542.92

Now lets create amortization schedule for the 5 years:

No.	Due Date	Payment	Extra Payments	Additional Payment	Interest	Principal	Balance
							$1,50,000.00
1	01-10-2013	1,542.92	0.00		1,500.00	42.92	1,49,957.08
2	01-11-2013	1,542.92	0.00		1,499.57	43.35	1,49,913.73
3	01-12-2013	1,542.92	0.00		1,499.14	43.78	1,49,869.95
4	01-01-2014	1,542.92	0.00		1,498.70	44.22	1,49,825.73
5	01-02-2014	1,542.92	0.00		1,498.26	44.66	1,49,781.07
6	01-03-2014	1,542.92	0.00		1,497.81	45.11	1,49,735.96
7	01-04-2014	1,542.92	0.00		1,497.36	45.56	1,49,690.40
8	01-05-2014	1,542.92	0.00		1,496.90	46.02	1,49,644.38
9	01-06-2014	1,542.92	0.00		1,496.44	46.48	1,49,597.90
10	01-07-2014	1,542.92	0.00		1,495.98	46.94	1,49,550.96
11	01-08-2014	1,542.92	0.00		1,495.51	47.41	1,49,503.55
12	01-09-2014	1,542.92	0.00		1,495.04	47.88	1,49,455.67
13	01-10-2014	1,542.92	0.00		1,494.56	48.36	1,49,407.31
14	01-11-2014	1,542.92	0.00		1,494.07	48.85	1,49,358.46
15	01-12-2014	1,542.92	0.00		1,493.58	49.34	1,49,309.12
16	01-01-2015	1,542.92	0.00		1,493.09	49.83	1,49,259.29
17	01-02-2015	1,542.92	0.00		1,492.59	50.33	1,49,208.96
18	01-03-2015	1,542.92	0.00		1,492.09	50.83	1,49,158.13
19	01-04-2015	1,542.92	0.00		1,491.58	51.34	1,49,106.79
20	01-05-2015	1,542.92	0.00		1,491.07	51.85	1,49,054.94
21	01-06-2015	1,542.92	0.00		1,490.55	52.37	1,49,002.57
22	01-07-2015	1,542.92	0.00		1,490.03	52.89	1,48,949.68
23	01-08-2015	1,542.92	0.00		1,489.50	53.42	1,48,896.26
24	01-09-2015	1,542.92	0.00		1,488.96	53.96	1,48,842.30
25	01-10-2015	1,542.92	0.00		1,488.42	54.50	1,48,787.80
26	01-11-2015	1,542.92	0.00		1,487.88	55.04	1,48,732.76
27	01-12-2015	1,542.92	0.00		1,487.33	55.59	1,48,677.17
28	01-01-2016	1,542.92	0.00		1,486.77	56.15	1,48,621.02
29	01-02-2016	1,542.92	0.00		1,486.21	56.71	1,48,564.31
30	01-03-2016	1,542.92	0.00		1,485.64	57.28	1,48,507.03
31	01-04-2016	1,542.92	0.00		1,485.07	57.85	1,48,449.18
32	01-05-2016	1,542.92	0.00		1,484.49	58.43	1,48,390.75
33	01-06-2016	1,542.92	0.00		1,483.91	59.01	1,48,331.74
34	01-07-2016	1,542.92	0.00		1,483.32	59.60	1,48,272.14
35	01-08-2016	1,542.92	0.00		1,482.72	60.20	1,48,211.94
36	01-09-2016	1,542.92	0.00		1,482.12	60.80	1,48,151.14
37	01-10-2016	1,542.92	0.00		1,481.51	61.41	1,48,089.73
38	01-11-2016	1,542.92	0.00		1,480.90	62.02	1,48,027.71
39	01-12-2016	1,542.92	0.00		1,480.28	62.64	1,47,965.07
40	01-01-2017	1,542.92	0.00		1,479.65	63.27	1,47,901.80
41	01-02-2017	1,542.92	0.00		1,479.02	63.90	1,47,837.90
42	01-03-2017	1,542.92	0.00		1,478.38	64.54	1,47,773.36
43	01-04-2017	1,542.92	0.00		1,477.73	65.19	1,47,708.17
44	01-05-2017	1,542.92	0.00		1,477.08	65.84	1,47,642.33
45	01-06-2017	1,542.92	0.00		1,476.42	66.50	1,47,575.83
46	01-07-2017	1,542.92	0.00		1,475.76	67.16	1,47,508.67
47	01-08-2017	1,542.92	0.00		1,475.09	67.83	1,47,440.84
48	01-09-2017	1,542.92	0.00		1,474.41	68.51	1,47,372.33
49	01-10-2017	1,542.92	0.00		1,473.72	69.20	1,47,303.13
50	01-11-2017	1,542.92	0.00		1,473.03	69.89	1,47,233.24
51	01-12-2017	1,542.92	0.00		1,472.33	70.59	1,47,162.65
52	01-01-2018	1,542.92	0.00		1,471.63	71.29	1,47,091.36
53	01-02-2018	1,542.92	0.00		1,470.91	72.01	1,47,019.35
54	01-03-2018	1,542.92	0.00		1,470.19	72.73	1,46,946.62
55	01-04-2018	1,542.92	0.00		1,469.47	73.45	1,46,873.17
56	01-05-2018	1,542.92	0.00		1,468.73	74.19	1,46,798.98
57	01-06-2018	1,542.92	0.00		1,467.99	74.93	1,46,724.05
58	01-07-2018	1,542.92	0.00		1,467.24	75.68	1,46,648.37
59	01-08-2018	1,542.92	0.00		1,466.48	76.44	1,46,571.93
60	01-09-2018	1,542.92	0.00		1,465.72	77.20	1,46,494.73
61	01-10-2018	1,542.92	0.00		1,464.95	77.97	1,46,416.76
62	01-11-2018	1,542.92	0.00		1,464.17	78.75	1,46,338.01

As we can see that last payment at end of period 60 (5*12) is 146,494.73.
Interest = 150,000*0.01=1500
principal = payment- inetrest=1542.92-1500=42.92
This reduces the outstanding principal, which is further used to calculate next interest payment

jeff jeffy answered 1 year ago

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