Question

A company has a loan of 80,000 to be paid I 20 annual level payments. The interest and the principal repayment in the 13th payment are the same. Find the amount of principal repaid in the 6th payment.

Answer in written form with formulas.

Answer 1

Working:

Sr. No.	Pricipal	Interest @ 12.50%	Principal Balance	Principal Paid
			80000
1	4000	10000	76000	4000
2	4000	9500	72000	8000
3	4000	9000	68000	12000
4	4000	8500	64000	16000
5	4000	8000	60000	20000
6	4000	7500	56000	24000
7	4000	7000	52000	28000
8	4000	6500	48000	32000
9	4000	6000	44000	36000
10	4000	5500	40000	40000
11	4000	5000	36000	44000
12	4000	4500	32000	48000
13	4000	4000	28000	52000
14	4000	3500	24000	56000
15	4000	3000	20000	60000
16	4000	2500	16000	64000
17	4000	2000	12000	68000
18	4000	1500	8000	72000
19	4000	1000	4000	76000
20	4000	500	0	80000
	80000	105000

First of all, we have divided loan amount i.e. 80000 in 20 equal installments that comes to 4000 per installment (80000/12)

As given, in 13th installment principal and interest amount is same i.e. 4000 is principal amount and 4000 is interest amount. If we calculate principal balance available from first installment then at the end of 12th year 32000 princpal was remaining to be paid, So on 32000 if we calculate ROI then it comes to 12.50% (4000/32000)%.

As per data filling in above table, total principle amount paid on 6th year is 24000.