In: Finance
Assumption: The equal payment(PMT) towards the Loan is an annual Payment |
PMT formula = Present Value / [ 1- ( 1+r)^-n]/ r |
Annual payment =100000 / ((1-(1.08)^-4) /0.08) |
Annual payment =100000 / (0.26497014) /0.08) |
Annual payment =100000 / 3.31212684) |
30192.08 |
Explanation: |
Year 1 |
i) Interest payment will be (rate) * (principal) |
8% * 100000 = 8000 |
ii) Annual Payment - interest portion = Payment towards principal |
30192.08 - 8000 = 22192.08 |
iii) Ending balance of principal = Beginning Principal Balance - payment towards Principal for that year |
100000 - 22192.08 = 77807.92 |
Year 2 |
i) Interest payment will be (rate) * (principal) |
Interest portion 8% * 77807.92 (remaining principal) = 6224.63 |
ii) Annual Payment - interest portion = Payment towards principal |
30192.08 - 6224.63 = 23967.45 |
iii) Ending balance of principal = Beginning Principal Balance - payment towards Principal for that year |
77807.92 - 23967.45 = 53840.47 |
and so on for the next 2yrs |
Yearbeginning balance Principal Ending balance 77807.92 53840.47 27955.6:3 0.00 Interest PaidPrincipal Paid PMT 30192.08 30192.08 30192.08 30192.08 1 100000 8000.00 6224.63 4307.24 2236.45 22192.08 23967.45 25884.84 27955.6:3 2 4