Question

3. Mr. Smart borrowed $4,000 from a bank on annuity for 1.5 years at 12% annual interest compounded and payable quarterly (every three months). Calculate the semiannual payments and provide a table that shows periodic payment, balance, interest payment, payment to principal for each payment as well as total amount which Mr. Smart will pay to the bank for the borrowed amount including interest and principal payments in the entire period of two years.

Answer 1

Loan Amount	$4,000
Time Period	1.5
Quarters	6
Interest	12%	pa
Quarterly Interest rate	3%

The EMI Schedule is as follows:

Quarters	O/s	Princ	Interest	Closing	Semi annual Payments
1	$4,000	667	$120	$3,333	1,553
2	$3,333	667	$100	$2,667
3	$2,667	667	$80	$2,000	1,473
4	$2,000	667	$60	$1,333
5	$1,333	667	$40	$667	1,393
6	$667	667	$20	$0
		4,000	420		4,420