Question

A $37,000 loan at 8.2% compounded semi-annually is to be repaid by equal semi-annual payments over 10 years.


a) What will be the principal component of the sixth payment?
b) What will be the interest component of the sixteenth payment?
c) How much will Payments 6 to 15 inclusive reduce the principal?
d) How much interest will be paid in the third year?
e) What will be the final payment?

Answer 1

Ans: Payment table and installment calculation is attached:

Principal outstanding		$37,000.00
Rate	8.2%/2	4.10%
Period	10 Years into semiannual periods	20
Payments per month		$   2,746.69

Principal outstanding	Interest @ 4.1% Semi annually	Installment	Outstanding Principal
37,000.00	1,517.00	2,746.69	35,770.31
35,770.31	1,466.58	2,746.69	34,490.20
34,490.20	1,414.10	2,746.69	33,157.61
33,157.61	1,359.46	2,746.69	31,770.38
31,770.38	1,302.59	2,746.69	30,326.28
30,326.28	1,243.38	2,746.69	28,822.97
28,822.97	1,181.74	2,746.69	27,258.02
27,258.02	1,117.58	2,746.69	25,628.91
25,628.91	1,050.79	2,746.69	23,933.00
23,933.00	981.25	2,746.69	22,167.56
22,167.56	908.87	2,746.69	20,329.74
20,329.74	833.52	2,746.69	18,416.57
18,416.57	755.08	2,746.69	16,424.96
16,424.96	673.42	2,746.69	14,351.70
14,351.70	588.42	2,746.69	12,193.43
12,193.43	499.93	2,746.69	9,946.67
9,946.67	407.81	2,746.69	7,607.79
7,607.79	311.92	2,746.69	5,173.02
5,173.02	212.09	2,746.69	2,638.42
2,638.42	108.18	2,746.69	-0.09

a) What will be the principal component of the sixth payment : $2,746.69 - $1,243.38 = $1,503.31

b) What will be the interest component of the sixteenth payment : $499.93

c) How much will Payments 6 to 15 inclusive reduce the principal : $18,132.85 (Total from excel sheet)

d) How much interest will be paid in the third year: $1,414.10

e) What will be the final payment: $2,746.69

For any query please ask in comment box, we are happy to help you. Also please don't forget to provide your valuable feedback. Thanks!