Question

Helen received a loan of $25,000 at 4.5% compounded quarterly. She had to make payments at the end of every quarter for a period of 7 years to settle the loan.

a. Calculate the size of payments.

Round to the nearest cent

b. Fill in the partial amortization schedule for the loan, rounding your answers to two decimal places.

Payment Number	Payment	Interest Portion	Principal Portion	Principal Balance
0				$25,000.00
1
2
: :	: :	: :	: :	: :
: :	: :	: :	: :	: :
Please fill in as well	Please fill in as well	Please fill in as well	Please fill in as well	Please fill in as well
Please fill in as well	Please fill in as well	Please fill in as well	Please fill in as well	0.00
Total	Please fill in as well	Please fill in as well	Please fill in as well

Answer 1

a) Size of payment is $1,045.82

We can find the answer using present value of annuity formula:

Where,
PVA = Present value of annuity
A = Annuity or payment
i = Interest rate in decimal form
a = Number of payments in a year
n = Number of years

b)

Payment Number	Payment	Inerest Portion	Principal Portion	Principal Balance
0	-	-	-	25,000.00
1	1,045.82	281.25	764.57	24,235.43
2	1,045.82	272.65	773.18	23,462.25
3	1,045.82	263.95	781.87	22,680.37
4	1,045.82	255.15	790.67	21,889.70
5	1,045.82	246.26	799.57	21,090.14
6	1,045.82	237.26	808.56	20,281.58
7	1,045.82	228.17	817.66	19,463.92
8	1,045.82	218.97	826.86	18,637.07
9	1,045.82	209.67	836.16	17,800.91
10	1,045.82	200.26	845.56	16,955.34
11	1,045.82	190.75	855.08	16,100.27
12	1,045.82	181.13	864.70	15,235.57
13	1,045.82	171.40	874.42	14,361.14
14	1,045.82	161.56	884.26	13,476.88
15	1,045.82	151.61	894.21	12,582.67
16	1,045.82	141.56	904.27	11,678.40
17	1,045.82	131.38	914.44	10,763.96
18	1,045.82	121.09	924.73	9,839.23
19	1,045.82	110.69	935.13	8,904.10
20	1,045.82	100.17	945.65	7,958.44
21	1,045.82	89.53	956.29	7,002.15
22	1,045.82	78.77	967.05	6,035.10
23	1,045.82	67.89	977.93	5,057.17
24	1,045.82	56.89	988.93	4,068.24
25	1,045.82	45.77	1,000.06	3,068.18
26	1,045.82	34.52	1,011.31	2,056.87
27	1,045.82	23.14	1,022.68	1,034.19
28	1,045.82	11.63	1,034.19	-
Total	29,283.09	4,283.09	25,000.00

Excel Formula: