Question

A borrower and lender agree that a 9,000,000 loan made at 12% interest for 30years will have a 600,000 balance on the maturity date if the loan will be on constant amortization mortgage (CAM) terms. Determine how much will be paid monthly and prepare a loan payment schedule for the first 4 months.

Answer 1

	Loan amount	9,000,000
	Loan Balance after 30year	600,000
	Total principal payment	8,400,000	(9000000-600000)
	Number of months of payment	360	(30*12)
	Constant amortization per month	23,333.33	(8400000/360)
	Monthly interest =(12/12)=1%
	LOAN AMORTIZATION SCHEDULE
		A	B=A*1%	C	D	E=A-C
	Month	Beginning Balance	Interest	Principal	Total Payment	Ending Balance
	1	9,000,000	90,000	23,333.33	113,333.33	8,976,666.67
	2	8,976,666.67	89,767	23,333.33	113,100.00	8,953,333.33
	3	8,953,333.33	89,533	23,333.33	112,866.67	8,930,000.00
	4	8,930,000.00	89,300	23,333.33	112,633.33	8,906,666.67