Question

What are the yearly mortgage payments on a 10-year loan for RM150,000 at 9% p.a. compounded annually? Construct an amortization table for the loan if the payment is made at the end of the period. Ans: P = RM 23,373.01

Answer 1

Annual Loan Payment

Loan Amount (P) = RM150,000

Interest Rate (n) = 9% per year

Number of years (n) = 10 Years

Loan Payment = [P x {r (1+r)ⁿ} ] / [( 1+r)ⁿ – 1]

= [RM150,000 x {0.09 x (1 + 0.09)¹⁰}] / [(1 + 0.09)¹⁰ – 1]

= [RM150,000 x {0.09 x 2.367364}] / [2.367364 – 1]

= [RM150,000 x 0.213068] / 1.367364

= RM23,373.01 per year

Loan Amortization Table

Year	Beginning Loan Amount (RM)	Annual Payment (RM)	Interest Paid at 9% (RM)	Repayment of Principal (RM)	Ending Loan Balance (RM)
1	1,50,000.00	23,373.01	13,500.00	9,873.01	1,40,126.99
2	1,40,126.99	23,373.01	12,611.43	10,761.58	1,29,365.41
3	1,29,365.41	23,373.01	11,642.89	11,730.12	1,17,635.29
4	1,17,635.29	23,373.01	10,587.18	12,785.83	1,04,849.45
5	1,04,849.45	23,373.01	9,436.45	13,936.56	90,912.89
6	90,912.89	23,373.01	8,182.16	15,190.85	75,722.04
7	75,722.04	23,373.01	6,814.98	16,558.03	59,164.02
8	59,164.02	23,373.01	5,324.76	18,048.25	41,115.77
9	41,115.77	23,373.01	3,700.42	19,672.59	21,443.18
10	21,443.18	23,373.01	1,929.84	21,443.18	0.00