Question

Suppose you borrow $46,000 at 8.25% annual interest to be repaid with a fully amortized plan over 14 years (equal end-of-year payments). What is the total amount of principal and interest paid?

Answer 1

	Annual rate(M)=	yearly rate/12=	8.25%	Annual payment=	5660.94
Year	Beginning balance (A)	Annual payment	Interest = M*A	Principal paid	Ending balance
1	46000.00	5660.94	3795.00	1865.94	44134.06
2	44134.06	5660.94	3641.06	2019.88	42114.18
3	42114.18	5660.94	3474.42	2186.52	39927.66
4	39927.66	5660.94	3294.03	2366.91	37560.75
5	37560.75	5660.94	3098.76	2562.18	34998.57
6	34998.57	5660.94	2887.38	2773.56	32225.01
7	32225.01	5660.94	2658.56	3002.38	29222.63
8	29222.63	5660.94	2410.87	3250.07	25972.55
9	25972.55	5660.94	2142.74	3518.21	22454.35
10	22454.35	5660.94	1852.48	3808.46	18645.89
11	18645.89	5660.94	1538.29	4122.66	14523.23
12	14523.23	5660.94	1198.17	4462.77	10060.46
13	10060.46	5660.94	829.99	4830.95	5229.51
14	5229.51	5660.94	431.43	5229.51	0.00

Where

Interest paid = Beginning balance * Annual interest rate

Principal = Annual payment – interest paid

Ending balance = beginning balance – principal paid

Beginning balance = previous Year ending balance

total payment=Annual payment*number of Year

=5660.9413*14

=79253.1782

Total interest paid= total payment-period 1 beginning balance

=79253.1782-46000

=33253.1782