SOLUTION: 1. a credit union gives me a loan of $40000 at a monthly rate of 1.25% on the reducing balance for a period of 2 years. How much will be my monthly payments? 2. Create an amortiz

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Question 1060984: 1. a credit union gives me a loan of $40000 at a monthly rate of 1.25% on the reducing balance for a period of 2 years. How much will be my monthly payments?
2. Create an amortization schedule for the life of the loan
Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website!
i get 1939.465922 per month as the amount you have to pay.

you are talking 1.25% per month.
that's equivalent to an annual percentage rate of 15% per year compounded monthly.

i used my financial calculator to get the results.

then i used an online amortization calculator to show you the month by month results.

those results are shown below:

that calculator can be found at this link.

http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx

loan payments at the end of each month are assumed.

you start with 40,000.
add 1.25% times that to it to get 40500 and then subtract the month end payment of 1939.47 to get a remaining balance of 38560.53.
add 1.25% times that to it to get 39042.54 and then subtract the month end payment of 1939.47 to get a remaining balance of 37103.07.
check the first 2 months of the payments in the picture and you'll see that they agree.

any questions, let me know.