Question

A borrower borrows on a five year loan $5,000 from a bank at 10% and will pay back the loan in ten equal $ payments (semi-annually) at the end of each time period. How much is each equal payment, how much principal and interest is paid back, and how much interest is paid back?

Answer 1

Since amount is paid in 10 equal installements being semi-annually that is every six months , install meant amount = total loan amount / no of instalments = $5000/10 equal instalments

=$500/semi annually will be the principle portion of the instalment . However interest portion of the instalment would differ for every instalment as a part of principle will be paid every 6 months .

Assumed dates	Principle($)	Calculation of int	interest portion	Total instalment (500+interest)
1-1-20x5 (loan borrowed)	5,000
30-6-20x5	5000	5000*10%*6/12	250	(500+250) 750
31-12-20x5	4500	4500*10%*6/12	225	725
30-6-20x6	4000	4000*10%*6/12	200	700
31-12-20x6	3500	3500*10%*6/12	175	675
30-6-20x7	3000	3000*10%*6/12	150	650
31-12-20x7	2500	2500*10%*6/12	125	625
30-6-20x8	2000	2000*10%*6/12	100	600
31-12-20x8	1500	1500*10%*6/12	75	575
30-6-20x9	1000	1000*10%*6/12	50	550
31-12-20x9	500	500*10%*6/12	25	525