Question

A N$1000 loan is repaid by annual payments of N$150, plus a smaller final payment. The first payment is made one year after the time of the loan and construct an amortization schedule and determine the size of the last payment

Answer 1

solution :

given

loan amount    =$1000

interest rate     =10%

payment at end of each year     =$150

time    =3 years

amortization schedule

The last payment at the and of 3 years shall be $835

interest=10% of the begiinning loan amount

Ending value = Beginning loan amount - payment made + interest

Current beginning loan amount = previous ending value.