SOLUTION: Please I need help with the following question: * Determine the annual payment on a $15,000 loan that is to be amortized over a four-year period and carries 10 percent interest

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Question 683334: Please I need help with the following question:
* Determine the annual payment on a $15,000 loan that is to be amortized over a four-year period and carries 10 percent interest rate. Also prepare a loan amortization schedule for this loan.
p = $15,000
r = $10%
t = 4 years (Compound annually)

FV = $15,000 (1 + 0.1)4
FV = $15,000 (1.4641)
FV = $21,961.5
DATA LOAN
Original Principle $15,000.00
Loan Term (Years) 4
Annual Interest Rate 10%
Payments per Year 12
Payments $4,732.06
(Note: I don't no how to calculate the principle)


year payment principle Interest Balance
0 $15,000
1 $4,732.06 $1,500.00
2 $4,732.06
3 $4,732.06
4 $4,732.06

Answer by solver91311(24713)   (Show Source): You can put this solution on YOUR website!


You also don't know how to spell Principal.

The value you want to put in the Principal column of your amortization table is the amount of the payment that goes to reducing the Principal balance of the loan. That is equal to the payment minus the amount of interest that has accrued in that period. 
Year   Payment   Principal   Interest  Balance
  0                                    $15,000.00

0.1 times the balance to get the accrued interest, $1500
4732.06 minus the interest of 1500 is the amount paid to principal, 3232.06
15000 minus 3232.06 is the new balance of $11,767.94

  1    $4732.06  $3232.06    $1500.00  $11,767.94

Repeat the process for the other three years.  You may be a few cents off at the end because of rounding errors.  Just adjust the final payment to make it come out right.

John

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