AMORTIZATION QUESTION

Question

Construct an amortization schedule for an $8000.00 loan with a 7% interest rate compounded quarterly. The loan will be paid back in one year making quarterly payments.

 

Is this lump sum or annuity? 

Answer 1

Answer: This is a loan repayment.

Calculate payments with Excel formula PMT =PMT(7%/4,1*4,8000,,0)

 

End of period payment: -$2,088.26

             
0 8,000.00
1 8,140.00   0.017500 -2,088.26   140.00  -1,948.26   6,191.74
2 6,300.10   0.017500 -2,088.26   108.36  -1,979.90   4,320.19
3 4,395.79   0.017500 -2,088.26     75.60  -2,012.66   2,383.14
4 2,424.84   0.017500 -2,088.26     41.70  -2,046.56      378.29
5    384.91   0.017500   -384.91        6.62    -378.29         0.00