1.

A debt of 10,000 with interest at 8% compounded To calculate the outstanding balance after three payments
quarterly is to be repaid by equal payments at the end of on a debt of $10,000 with 8% interest compounded
every three months for two years. Calculate the size of the quarterly over two years, we'll use the formula for the
monthly payments. remaining balance on a loan:

To find the monthly payments needed to repay a debt of

$10,000 with 8% interest compounded quarterly over two
years, we'll use the formula for the present value of an
annuity:

Balance = PV * (1 + r)^n - P * {(1 + r)^n - 1}

{r}
Where:
- ( B ) is the remaining balance after ( n ) payments
- ( PV ) is the initial principal amount of the loan
- ( r ) is the interest rate per period (quarterly in this case)
- ( n ) is the number of payments made
- ( P ) is the payment amount

We've already calculated the payment amount in the

PV= P x [ 1- (1 + r)^-n]
previous calculation, which is approximately (P) $1,365.10 .
r
transposing the above equation
Let's find the outstanding balance after three payments. ( n
P = r * PV ____
= 3 ):
{1 - (1 + r)^{-nt}}
Calculate ( r = 0.08 / 4 = 0.02 ):
Where:
- ( P ) is the payment amount B = 10,000 * (1 + 0.02)^3 - 1,365.10* (1 + 0.02)^3 - 1}
- ( PV ) is the present value of the debt {0.02}
- ( r ) is the interest rate per period (quarterly in this case) = 6,434.33
- ( n ) is the number of periods (quarters)
- ( t ) is the time in years 3. A contractor's price for a new building was $85,100. Stampede
Inc., the buyer of the building, paid $16,250 down and financed
Let's calculate it step by step. the balance by making equal payments at the end of every six
months for 14 years. Interest is 9.8% compounded semi-annually.
What is the size of the semi-annual payment?
First, let's determine the quarterly interest rate:
r = {8%}/100/{4} = 0.08 / 4 = 0.02
This situation involves finding the size of the semi-annual payment
to finance the remaining balance after a down payment.
Now, the total number of quarterly periods over two years:
n = 2 times 4 = 8 The formula to calculate the equal payments for an amortizing
loan is:
Putting these values into the formula:

P = 0.02 * 10,000
{1 - (1 + 0.02)^{-8}
= 1,365.097 ~ 1,365.10

2. A debt of 10,000 with interest at 8% compounded

quarterly is to be repaid by equal payments at the end of
every three months for two years. Calculate the outstanding
balance after three payments.
P={ r* PV }
{1 - (1 + r)^{-n} ] Now, let's calculate the remaining balance after 6 years, which is
12 semi-annual payments. ( n = 12 ):
Where:
- ( P ) is the payment amount B = 68,850 * (1 + 0.049)^{12} - 4,571.29* {(1 + 0.049)^{12} - 1}
- ( PV ) is the present value of the loan {0.049}
- ( r ) is the interest rate per period (semi-annually in this case) = 49,896.99
- ( n ) is the number of periods (semi-annual payments)
- ( t ) is the time in years 5. A contractor's price for a new building was $85,100. Stampede
Inc., the buyer of the building, paid $16,250 down and financed
The present value of the loan after the down payment: the balance by making equal payments at the end of every six
PV = 85,100 - 16,250 = 68,850 months for 14 years. Interest is 9.8% What is the total cost of the
building for Stampede Inc.?
The semi-annual interest rate:
r = {9.8%}/{2} = 0.098 / 2 = 0.049 ] To determine the total cost of the building for Stampede Inc.,
you'd sum up the down payment made and the total amount paid
The total number of semi-annual periods over 14 years: over the loan period.
n = 14 times 2 = 28
Given:
Now, substitute these values into the formula : - Contractor's price for the building: $85,100
- Down payment made: $16,250
P= { 0.049* 68,850 } - Loan term: 14 years
{1 - (1 + .049)^{-28}} - Interest rate: 9.8% compounded semi-annually

= 4,571.285 ~ 4,571.29 First, let's find the total amount paid over the loan period by
multiplying the semi-annual payment by the total number of
4. A contractor's price for a new building was $85,100. Stampede payments over 14 years (28 payments, since it's paid semi-
Inc., the buyer of the building, paid $16,250 down and financed annually).
the balance by making equal payments at the end of every six
months for 14 years. Interest is 9.8% compounded semi-annually. We've calculated the semi-annual payment previously as
How much will Stampede Inc. owe after 6 years? approximately $4,571.29.

To determine the amount Stampede Inc. will owe after 6 years on The total amount paid over 14 years would be \(28 \times
a loan of $85,100 with a $16,250 down payment, compounded $4,571.29). =127,996.12
semi-annually at an interest rate of 9.8%, we'll use the formula to
calculate the remaining balance on a loan: Finally, add the down payment ($16,250)to this total amount paid
to find the overall cost of the building for Stampede Inc. =
$144,246.12

6. A contractor's price for a new building was $85,100. Stampede

Inc., the buyer of the building, paid $16,250 down and financed
the balance by making equal payments at the end of every six
months for 14 years. Interest is 9.8% compounded semi-annually.
What is the total interest included in the payments?
Balance = PV * (1 + r)^n - P * (1 + r)^n - 1}
{r}
To find the total interest included in the payments made by
Stampede Inc. over the 14-year period, you can subtract the total
Where:
amount paid from the initial loan amount.
- ( B ) is the remaining balance after ( n ) payments
- ( PV ) is the present value of the loan
Here's the breakdown:
- ( r ) is the interest rate per period (semi-annually in this case)
- Initial loan amount after the down payment:
- ( n ) is the number of payments made
=$85,100 - $16,250 = $68,850
- ( P ) is the payment amount
- Semi-annual payment (calculated previously):
approximately $4,571.29
First, let's find the payment amount using the previous
- Total number of payments over 14 years:
calculation. The present value of the loan after the down payment
28 payments (14 years * 2 payments per year)
was $68,850, and the payment was approximately $4,571.29.
The total amount paid over the loan period would be
(28 * $4,571.29\) = 127,996.12 To determine the remaining balance owed by Sepaba Investments
after 20 years on a loan of $160,000, with a $40,000 down
Now, subtract this total amount paid from the initial loan amount payment, compounded semi-annually at an interest rate of 6%,
to find the we can use the formula for the remaining balance on a loan:
total interest paid. =127,996.12 - $68,850
= $59,146.12

7. An investor's price for a townhouse was $160,000. Sepaba

Investments, the buyer of the rental unit, paid $40,000 down and
financed the balance by making equal payments at the end of
every six months for 25 years. Interest is 6% compounded semi-
annually. What is the size of the semi-annual payment?
B = PV * (1 + r)^n - P * {(1 + r)^n - 1}
To find the size of the semi-annual payment for the financed {r}
balance on the townhouse, we'll use the formula for the payment Where:
amount in an amortizing loan: - ( B ) is the remaining balance after ( n ) payments
- ( PV ) is the present value of the loan
P ={ r * PV } - ( r ) is the interest rate per period (semi-annually in this case)
{1 - (1 + r)^{-nt}} - ( n ) is the number of payments made
- ( P ) is the payment amount
Where:
- ( P ) is the payment amount Given:
- ( PV ) is the present value of the loan - Initial price of the townhouse: $160,000
- ( r ) is the interest rate per period (semi-annually in this case) - Down payment made: $40,000
- ( n ) is the number of periods (semi-annual payments) - Loan term: 25 years
- ( t ) is the time in years - Interest rate: 6% compounded semi-annually

Given: The present value of the loan after the down payment is ( PV =
- Initial price of the townhouse: $160,000 160,000 - 40,000 = 120,000 ).
- Down payment made: $40,000
- Loan term: 25 years The semi-annual interest rate is ( r = 6%}/100/{2} = 0.06 / 2 =
- Interest rate: 6% compounded semi-annually 0.03 ).

The present value of the loan after the down payment is ( PV = The total number of semi-annual periods over 20 years is ( n = 20
160,000 - 40,000 = 120,000 ). times 2 = 40 ).

The semi-annual interest rate is ( r = dfrac{6%}{2} = 0.06 / 2 = Now, we want to find the remaining balance after 20 years, which
0.03 ). corresponds to 40 semi-annual payments using the formula.

The total number of semi-annual periods over 25 years is ( n = 25 B = [120,000 (1 +.03)^40] - 4,663.86 * {(1 +.03)^40 - 1}
times 2 = 50 ). {0.03}
= 39,783.615 ~ 39,783.62
Let's calculate the semi-annual payment amount using these
values: 9. An investor's price for a townhouse was $160,000. Sepaba
Investments, the buyer of the rental unit, paid $40,000 down and
P = { 0.03 * 120,000 } financed the balance by making equal payments at the end of
{1 - (1 +.03)^{-50}} every six months for 25 years. Interest is 6% compounded semi-
= 4,663.859 ~ 4,663.86 annually. What is the total cost of the building for Sepaba
Investments?

8. An investor's price for a townhouse was $160,000. Sepaba To calculate the total cost of the building for Sepaba Investments,
Investments, the buyer of the rental unit, paid $40,000 down and including both the down payment and the total payments made
financed the balance by making equal payments at the end of over the 25-year loan period, we'll follow these steps:
every six months for 25 years. Interest is 6% compounded semi-
annually. How much will Sepaba Investments owe after 20 1. Calculate the total amount paid over the 25-year loan term.
years?
2. Add the down payment to the total amount paid to find the P ={ rPV }
overall cost. {1 - (1 + r)^{-nt}}

Given: Where:
- Initial price of the townhouse: $160,000 - ( P ) is the fixed monthly payment
- Down payment made: $40,000 - ( PV ) is the present value of the loan
- Loan term: 25 years - ( r ) is the interest rate per period (monthly in this case)
- Interest rate: 6% compounded semi-annually - ( n ) is the total number of payments

To calculate the total amount paid, we'll first determine the semi- Given:
annual payment = 4,663.86 - Loan amount ( PV ): $14,100
Then, multiply the semi-annual payment by the total number of - Loan term: 11 years (11 years * 12 months per year = 132
payments (50 payments over 25 years, paid semi-annually). months)
= 4,663.86 * 50 = $233,193 - Interest rate: 5.4% compounded monthly = 5.4/100/12= 0.0045
Then Add the down payment to get overall cost:
= $233,193 + $40,000 = $273,193
Let's calculate the first payment amount using these values.
10. An investor's price for a townhouse was $160,000. Sepaba P = { 0.0045 * 14,100 }
Investments, the buyer of the rental unit, paid $40,000 down and {1 - (1 + .0045)^{-132}}
financed the balance by making equal payments at the end of = $141.89
every six months for 25 years. Interest is 6% compounded semi-
annually. What is the total interest included in the payments?
12. A loan of $8,380.00 is repaid by equal payments made at the
To find the total interest included in the payments over 25-year end of every three months for 3 years. If interest is 7%
period, you can subtract the total amount paid from the initial compounded quarterly, find the size of quarterly payment of the
loan amount. loan.

Here's the breakdown: To find the total amount paid on a loan of $8,380 repaid by equal
- Initial loan amount after the down payment: payments made at the end of every three months for 3 years, with
=$160,000 - $40,000 = $120,000 an interest rate of 7% compounded quarterly, we'll use the
- Semi-annual payment (calculated previously): formula for calculating the total payment amount on an
approximately $4,663.86 amortizing loan.
- Total number of payments over 25 years:
50 payments (25 years * 2 payments per year) The formula for calculating the total payment amount on an
amortizing loan is:
The total amount paid over the loan period would be
(50 * $4,663.86) = $233,193 [ text{Total amount paid} = P times n ]

Now, subtract this total amount paid from the initial loan amount Where:
to find the - ( P ) is the fixed payment amount
total interest paid. =233,193 - $120,000 - ( n ) is the total number of payments= 3 years*4 (quarterly)=12
= $113,193 - ( r ) = 7% quarterly= 7/100/4 = 0.0175

11. A loan of $14,100 is amortized over 11 years by equal monthly To determine ( P ), the fixed payment amount, we can use the
payments at 5.4% compounded monthly. What are the first formula for the fixed payment of an amortizing loan:
payment amounts
P ={ r * PV }
To find the amount of the first payment for a loan of $14,100 {1 - (1 + r)^{-nt}}
amortized over 11 years with equal monthly payments at an
interest rate of 5.4% compounded monthly, we can use the Given:
formula for calculating the fixed monthly payment on an - Loan amount (( PV )): $8,380
amortizing loan. - Loan term: 3 years
- Interest rate: 7% compounded quarterly
The formula for calculating the fixed monthly payment on an First, let's find the fixed payment amount ( P ) using the formula
amortizing loan is: for the fixed payment of an amortizing loan.
P = { 0.0175 * 8380 }
{1 - (1 + 0.0175)^{-12}}
 = $780.29
16. Rola Inc. borrowed $42,000 at 7% compounded semi-annually.
13. A loan of $8,380.00 is repaid by equal payments made at the The loan is repaid by payments of $4,700 due at the end of every
end of every three months for 3 years. If interest is 7% six months. How much of the principal will be repaid by the 6th
compounded quarterly, find the total amount paid. payment?

Then, we'll multiply this payment by the total number of To calculate the portion of the principal repaid by the 6th
payments total amount paid = $780.29 * 12 payment
= $9,363.52

14. A loan of $8,380.00 is repaid by equal payments made at the

end of every three months for 3 years. If interest is 7% divide the Principal with number of payment is the portion of
compounded quarterly, find the total cost of the loan. principal repaid on each payment

Total cost of the loan = Total amount paid =$9,363.52 = 42,000/11(payments)

= $3,818.18 (portion of principal repaid per payment)
15. Rola Inc. borrowed $42,000 at 7% compounded semi-annually.
The loan is repaid by payments of $4,700 due at the end of every 17. Rola Inc. borrowed $42,000 at 7% compounded semi-annually.
six months. How many payments are needed? The loan is repaid by payments of $4,700 due at the end of every
six months. What is the amount the last payment?
To find the number of payments needed to repay a loan of
$42,000 at 7% interest compounded semi-annually, with To find the amount of the last payment in a loan where $42,000 is
payments of $4,700 due at the end of every six months, we can borrowed at 7% compounded semi-annually, with payments of
use the formula for calculating the number of periods for an $4,700 due at the end of every six months, we'll first determine
amortizing loan. the remaining balance after all but the last payment has been
made. Then, we'll calculate the final payment needed to clear the
The formula to find the number of periods (n) for an amortizing remaining balance.
loan, given the present value (PV), the periodic payment amount
(P), and the periodic interest rate (r), is: Let's use the loan amortization formula to find the remaining
balance after all but the last payment:

B = PV * (1 + r)^n - P * {(1 + r)^n - 1}

{r}

Where:
n = {-log (1 - {r * PV} / {P})} - ( PV ) is the remaining principal balance
{log(1 + r)} - ( P ) is the periodic payment amount
- ( r ) is the periodic interest rate
Given: - ( n ) is the total number of payments
- Loan amount (PV): $42,000
- Periodic payment amount (P): $4,700 Given:
- Periodic interest rate: 7% compounded semi- - Loan amount (\( PV \)): $42,000
annually=7/100/2=0.035 - Periodic payment amount (\( P \)): $4,700
- Periodic interest rate: 7% compounded semi-annually=0.035
Let's calculate the number of payments required to repay the
loan. B = 42,000 (1 + 0.035)^10 – 4,700 {(1 + 0.035)^10 - 1}
{0.035}
n = {-log (1 - {0.035 * 42,000} / {4,700})} = 4,107.60 (balance before last payment)
{log(1 + 0.035)}
= 0.16289533560461457433771602936393 18. A debt of $12500 with interest at 5.5% compounded semi-
0.01494034979293655824409402403693 annually is amortized by making payments of $1000 at the end of
= 10.903 ~ 11 payments
every six months. Calculate the outstanding balance after seven n = {-log (1 – {0.0375 (52500)} / {4700})
years. {log (1.0375)}
= {- (-0.2357)}
To calculate the outstanding balance after seven years, you can 0.01598
use the formula for the outstanding balance on a loan being paid = 14.749 (payments)
off through regular payments:
Loan Total Cost
B = PV * (1 + r)^n - P * {(1 + r)^n - 1} =4700 (14.749)
{r} = 69,323.52

Where: 20. Barbara borrowed $12000 from the bank at 9% compounded

- ( B ) is the outstanding balance monthly. The loan is amortized with end of month payments over
- ( P ) is the periodic payment amount ($1000 in this case) five years. Calculate the interest included in the 20th payment.
- ( r ) is the periodic interest rate
- ( n ) is the total number of payments To find the interest included in the 20th payment, you'll first need
to calculate the remaining balance after 19 payments and then
The periodic interest rate ( r ) is the annual interest rate divided by determine the interest accrued on that remaining balance in the
the number of compounding periods per year: ( r = frac{5.5%}{2} = 20th month.
0.055 / 2 = 0.0275 )
a. Calculate the monthly payment amount using the formula for
The total number of payments over seven years is ( 7 times 2 = an amortized loan:
14 ) payments. [ P = {r times PV times (1 + r)^n}
{(1 + r)^n - 1}
Now, plug these values into the formula to find the outstanding Where:
balance. - ( P ) is the monthly payment amount
- ( r ) is the monthly interest rate ({9%}/100/{12} = 0.0075 )
B = 12,500 * (1 + 0.0275)^14 - 1000* {(1 + 0.0275)^14 - 1} - ( PV ) is the present value of the loan ($12,000)
{0.0275} - ( n ) is the total number of payments (5 years * 12 months/year =
= 1,475.14 (outstanding balance after 7 years) 60 payments)

19. Olfert Inc. is repaying a loan of $52500 by making payments of Calculate ( P ) using the formula.
$4700 at the end of every six months. If interest is 7.5% P = {0.0075 * 12000 * (1 + 0.0075)^60}
compounded semi-annually, what is the total cost of the loan? {(1 +0.0075)^60 - 1}
=$249.10
To find the total cost of the loan, you'll need to sum up all the
payments made over the loan period. You can use the formula for b. Use the formula to find the remaining balance after 19
calculating the total cost of an amortized loan: payments:

First, let's determine the number of payments. The loan is repaid Remaining , balance = PV times {(1 + r)^n - (1 + r)^m}
semi-annually, and if it's being repaid over a specific period, you {(1 + r)^n - 1}
can calculate the number of payments using the loan term and Where:
the payment frequency. - ( PV ) is the initial principal amount ($12,000)
- ( r ) is the monthly interest rate
The loan term is not provided, but assuming it's for ( n ) years: - ( n ) is the total number of payments (60)
- ( m ) is the number of payments made (19 in this case)
n = {-log (1 - {r * PV} / {P})}
{log(1 + r)} Calculate the remaining balance after 19 payments.
Where: [Remaining , balance] = PV times {(1 + r)^n - (1 + r)^m}
- ( P ) is the payment amount ($4700) {(1 + r)^n - 1}
- ( r ) is the periodic interest rate(7.5/100/ 2 = 0.0375) = 12000 * {(1 + 0.0075)^60 - (1 + 0.0075)^19}
- ( PV ) is the present value of the loan ($52500) {(1 +0.0075)^60 - 1}
- ( n ) is the total number of payments = 8,764.11

The periodic interest rate ( r ) is ( frac{7.5%}{2} = c. The interest for the 20th month is the product of the remaining
balance after 19 payments and the monthly interest rate ( r ).

Interest = [Remaining , balance] * r

 = 8,764.11 * 0.0075 22.Barbara borrowed $12 000 from the bank at 9.0%
= $65.73 (interest included in the 20th payment) compounded monthly. The loan is amortized with end-of-month
payments over five years. What is the total amount of the first
two payments?
21. Barbara borrowed $12 000 from the bank at 9.0%
compounded monthly. The loan is amortized with end-of-month To find the total amount of the first two payments on a loan that's
payments over five years. Calculate the principal repaid in the being amortized, you'll need to calculate the payment amount
36th payment. first using the loan amortization formula.

To determine the principal repaid in the 36th payment of an The formula for calculating the monthly payment amount ( P ) for
amortized loan, you can follow these steps: an amortized loan is:

a. Calculate the monthly payment amount using the formula for

an amortized loan: P = {r times PV times (1 + r)^n}
P = {r * PV times (1 + r)^n} {(1 + r)^n - 1}
{(1 + r)^n - 1} Where:
Where: - ( P ) is the monthly payment amount
- ( P ) is the monthly payment amount - ( r ) is the monthly interest rate (( frac{9%}/100/{12} = 0.0075
- ( r ) is the monthly interest rate (( frac{9%}/100/{12} = 0.0075 - ( PV ) is the present value of the loan ($12,000)
- ( PV ) is the present value of the loan ($12,000) - ( n ) is the total number of payments (5 years * 12 months/year =
- ( n ) is the total number of payments (5 years * 12 months/year = 60 payments)
60 payments)
Calculate ( P ) using the formula.
Calculate ( P ) using the formula. P = {0.0075* 12000 * (1 + 0.0075)^60}
P = {0.0075* 12000 * (1 + 0.0075)^60} {(1 + 0.0075)^60 - 1}
{(1 + 0.0075)^60 - 1} = $249.10
= $249.10
Total 1st two payments = $249.10 (2)
b. Utilize the formula for the remaining balance after 36 = $498.20
payments:
23. Barbara borrowed $12 000 from the bank at 9.0%
Remaining , balance = PV * {(1 + r)^n - (1 + r)^m} compounded monthly. The loan is amortized with end-of-month
{(1 + r)^n - 1} payments over five years. What is the of the 20th principal
Where: payment?
- ( PV ) is the initial principal amount ($12,000)
- ( r ) is the monthly interest rate The principal payment in the 20th month can be calculated by
- ( n ) is the total number of payments (60) determining the remaining loan balance after 19 payments and
- ( m ) is the number of payments made (35 in this case) subtracting it from the initial loan amount.

Calculate the remaining balance after 35 payments. To calculate the remaining loan balance after (n) payments for an
amortized loan, you can use the formula:
Remaining , balance = 12000 *{(1 + 0.0075)^60 - (1 + 0.0075)^35}
{(1 + 0.0075)^60 - 1} Remaining , balance = PV * {(1 + r)^n - (1 + r)^m}
=3,201.329195756938 {(1 + r)^n - 1}
0.56568102694156
= 5,659.25 Where:
- (PV) is the initial principal amount ($12,000)
c. The principal repaid in the 36th payment is the difference - (r) is the monthly interest rate ((9%) per year compounded
between the total payment due in the 36th month and the monthly, so (r = {9%}/100/{12} = 0.0075)
interest for that month, which is calculated based on the - (n) is the total number of payments (5 years * 12 months/year =
remaining balance after 35 payments. 60 payments)
- (m) is the number of payments made (19 in this case)
principal repaid @ 36 = P – (Balance @35 payment * r)
=$249.10 – ($5,659.25 * .0075)
= $206.66
Calculate the remaining balance after 19 & 20 payments.
Remaining , balance @ 19 = 12000 * {(1 + 0.0075)^60 - (1 + 0.0075)^19}
 {(1 + 0.0075)^60 - 1} =3,201.32919/0.565681026941
= 4,957.69122/0.5656810 = 5,659.25
= 8,764.11
c. The interest for the 36th month is the product of the remaining
Remaining , balance @ 20 = 12000 * {(1 + 0.0075)^60 - (1 + 0.0075)^20}
balance after 35 payments and the monthly interest rate ( r ).
{(1 + 0.0075)^60 - 1}
= 4,853.96261566/0.5656810
= 8,580.74 Interest @ 36th = [Remaining , balance @ 35] * r = 5,659.25 (.0075)
= $42.44
The principal payment in the 20th month is the difference
between the remaining balance after 19 payments and the
25. Barbara borrowed $12 000 from the bank at 9.0%
remaining balance after 20 payments.
compounded monthly. The loan is amortized with end-of-month
payments over five years. Calculate the totals of amount paid?
Principal payment = 8,764.11 - 8,580.74
= $183.37
To calculate the total amount paid over the entire loan term, you
can use the formula for the total payment in an amortized loan
24. Barbara borrowed $12 000 from the bank at 9.0%
and then multiply it by the total number of payments.
compounded monthly. The loan is amortized with end-of-month
payments over five years. What is the amount of the 36th interest
a. First, calculate the monthly payment amount using the loan
payment amount?
amortization formula:
P = {r times PV times (1 + r)^n}
To calculate the interest payment amount in the 36th month of an
{(1 + r)^n - 1} ]
amortized loan, you'll first determine the remaining loan balance
Where:
after 35 payments and then calculate the interest for the 36th
- ( P ) is the monthly payment amount
month based on that remaining balance.
- ( r ) is the monthly interest rate ( frac{9%}/100/{12} = 0.0075 )
- ( PV ) is the present value of the loan ($12,000)
a. Find the monthly payment amount using the loan amortization
- ( n ) is the total number of payments (5 years * 12 months/year =
formula:
60 payments)
P = {r times PV times (1 + r)^n}
{(1 + r)^n - 1}
Calculate ( P ) using the formula.
Where:
P = {0.0075 * 12,000 * (1 + 0.0075)^60}
- ( P ) is the monthly payment amount
{(1 + 0.0075)^60 - 1}
- ( r ) is the monthly interest rate ({9%}/100/{12} = 0.0075 )
=249.10
- ( PV ) is the present value of the loan ($12,000)
- ( n ) is the total number of payments (5 years * 12 months/year =
b. Multiply the monthly payment amount by the total number of
60 payments)
payments (60 payments in this case) to find the total amount paid
over the entire loan term.
Calculate ( P ) using the formula.
P = {0.0075 * 12,000 * (1 + 0.0075)^60}
total amount paid includes = 249.10 * 60
{(1 + 0.0075)^60 - 1}
= $14,946.00
= 140.9112/0.565681
= 249.10
26. Barbara borrowed $12 000 from the bank at 9.0%
compounded monthly. The loan is amortized with end-of-month
b. Use the formula for the remaining balance after 35 payments:
payments over five years. Calculate total amount of interest paid?
Remaining , balance = PV {(1 + r)^n - (1 + r)^m}
To calculate the total amount of interest paid on Barbara's loan,
{(1 + r)^n - 1} ]
you can follow these steps:
Where:
- ( PV ) is the initial principal amount ($12,000)
a. Calculate the monthly payment amount using the loan
- ( r ) is the monthly interest rate
amortization formula:
- ( n ) is the total number of payments (60)
P = {r times PV times (1 + r)^n}
- ( m ) is the number of payments made (35 in this case)
{(1 + r)^n - 1} ]
Where:
- ( P ) is the monthly payment amount
Calculate the remaining balance after 35 payments.
- ( r ) is the monthly interest rate ((9.0%) per year compounded
Remaining , balance @ 35 = 12000{(1 + 0.0075)^60 - (1 + 0.0075)^35}
monthly, so (r = frac{9.0%}{12} = 0.09 / 12))
{(1 + 0.0075)^60 - 1}
- ( PV ) is the present value of the loan ($12,000)
- ( n ) is the total number of payments (5 years * 12 months/year = a. Calculate the monthly payment amount using the loan
60 payments) amortization formula:
P = {r * PV * (1 + r)^n}
Calculate ( P ) using the formula. {(1 + r)^n - 1}
P = {0.0075 * 12,000 * (1 + 0.0075)^60} Where:
{(1 + 0.0075)^60 - 1} - ( P ) is the monthly payment amount
=249.10 - ( r ) is the monthly interest rate (11.12%) per year compounded
monthly, so (r = {11.12%}/100/{12} = 0.0092666)
b. The total amount paid over the loan term can be found by - ( PV ) is the present value of the loan ($8,321.00)
multiplying the monthly payment ( P ) by the total number of - ( n ) is the total number of payments (5 years * 12 months/year =
payments (60 payments in this case). 60 payments)

total amount paid= 249.10 * 60 =14,946 Calculate ( P ) using the formula.

P = {0.0092666 * 8,321.00 (1 + 0.009266)^60}
c. Finally, subtract the initial loan amount ($12,000) from the total {(1 + 0.0092666)^60 - 1}
amount paid to find the total interest paid. This will give you the =134.09787386178/0.7391561753
sum of all the interest payments made throughout the loan term. = 181.42
b. Use the loan amortization formula to find the remaining
Interests total =14,946 - 12,000 = $2,946 balance after 23 payments:

Remaining , balance = PV * {(1 + r)^n - (1 + r)^m}

27. Mr. Lamb borrowed $8 321.00 from the bank at 11.12% {(1 + r)^n - 1}
compounded monthly. He agreed to repay the loan in equal Where:
monthly payments over five years. What is the size of monthly - ( PV ) is the initial principal amount ($8,321.00)
payment? - ( r ) is the monthly interest rate
- ( n ) is the total number of payments (60)
To find the size of the monthly payment for Mr. Lamb's loan, you - ( m ) is the number of payments made (23 in this case)
can use the formula for calculating the monthly payment amount
on an amortizing loan: Calculate the remaining balance after 23 payments.
Remaining , balance @23 = 8,321 *{(1.0092666)^60 - (1.0092666)^23}
{(1.0092666)^60 - 1}
P = {r * PV times (1 + r)^n}
= 4,184.50/ 0.7392244
{(1 + r)^n - 1} ]
= 5,660.71
c. The interest for the 24th month is the product of the remaining
Where:
balance after 23 payments and the monthly interest rate (r).
- ( P ) is the monthly payment amount
- ( r ) is the monthly interest rate per year compounded monthly,
interest for the 24th month= 5,660.71 *0.009266
so (r = {11.12%}/100/{12} = 0.009266
= 52.45
- ( PV ) is the present value of the loan ($8,321.00)
- ( n ) is the total number of payments (5 years * 12 months/year =
29. Mr. Lamb borrowed $8321.00 from the bank at 11.12%
60 payments)
compounded monthly. He agreed to repay the loan in equal
monthly payments over five years. What is the principal repaid in
Calculate ( P ) using the provided formula.
the 37th payment?
P = {0.009266 * 8,321.00 (1 + 0.009266)^60}
{(1 + 0.009266)^60 - 1}
To determine the principal repaid in the 37th payment, you can
=134.0930907/0.7391561753
utilize the loan amortization approach.
= 181.42

a. Use the loan amortization formula to determine the remaining

28. Mr. Lamb borrowed $8 321.00 from the bank at 11.12%
balance after 36 & 37payments:
compounded monthly. He agreed to repay the loan in equal
monthly payments over five years. How much of the 24th
Remaining , balance = PV * {(1 + r)^n - (1 + r)^m}
payment is interest?
{(1 + r)^n - 1}
Where:
To calculate the interest portion of the 24th payment, you'll first
- ( PV ) is the initial principal amount ($8321.00)
need to find the remaining balance after 23 payments and then
- ( r ) is the monthly interest rate (r = {11.12%}/100/{12}
determine the interest accrued on that remaining balance in the
=0.00926666)
24th month.
- ( n ) is the total number of payments (60)
- ( m ) is the number of payments made (36 & 37 in this case)

Calculate the remaining balance after 36 & 37 payments.

Remaining , balance@36 = 8321 * {(1.00926666)^60 - (1.00926666 + r)^36}
{(1.00926666 + r)^60 - 1}
= 2,873.9316/0.73922441495
= 3,887.77
Remaining , balance@37 = 8321 * {(1.00926666)^60 - (1.00926666)^37}
{(1.00926666 )^60 - 1}
= 2,766.45553/0.739224414956
= 3,742.38

c. The principal repaid in the 37th payment is the difference

between the remaining balance after 36 payments and the
remaining balance after 37 payments. This represents the
reduction in the loan principal in the 37th payment.

principal repaid in 37th =3,887.77 - 3,742.38

= $145.39

30. Cody borrowed $9100 from his credit union. He agreed to

repay the loan by making equal monthly payments for 4 years.
Interest is 9% computed monthly. What is the size of the monthly
payment?

To determine the size of Cody's monthly payment for a loan with

equal monthly payments over 4 years at 9% interest compounded
monthly, you can use the loan amortization formula:

P = {r * PV * (1 + r)^n}
{(1 + r)^n - 1}

Where:
- ( P ) is the monthly payment amount
- ( r ) is the monthly interest rate ((9%) per year compounded
monthly, so (r = frac{9%}/100/{12} = 0.0075)
- ( PV ) is the present value of the loan ($9100)
- ( n ) is the total number of payments (4 years * 12 months/year =
48 payments)

Calculate ( P ) using the formula to find the monthly payment

amount for Cody's loan.
P = {0.0075 * 9100 (1 + 0.0075)^48}
{(1 + 0.0075)^48 - 1}
=97.69341399/0.431405333313
=$226.45