In: Accounting
Level payment = loan amount x pvaf
= 30000xpvaf(5,8%)
= 30000x3.9927=119781
Therefore per annum payment = 119781/5 = 23956.20
And per month payment = 23956.20/12 = $1996.35
(ii).
Calculation of loan balance after 3rd month payment = 30000x(1+0.08/12)3 - 1996.35x[{1+0.08/12}3 - 1]/0.08/12
30000x1.0202-6029
=30606-6029=$24577.
Loan balance at the end of month 3 after 3rd month payment = $24577
(iii) . Calculation of loan balance at the end of month 3 after 3rd payment using prospective method will be as follows
Month | beginning of month balance | interest | payment monthly | principal payment | ending balance of month |
1 | 30000 | 201 | 1996.35 | 1795.35 | 28204.35 |
2 | 28204.35 | 189 | 1996.35 | 1807.35 | 26397 |
3 | 26397 | 176.35 | 1996.35 | 1820 | 24577 |
Therefore balance of loan after 3rd payment using prospective method = $24577.
(iv) total interest payment = total payment - principal payment
= 119781-30000
= $89780