Chapter 22: Loan Amortization

This example illustrates the initial monthly payments of a loan with a principal balance of 50,000, an interest rate of ten percent, and a payment period of three years or thirty-six months

Loan Amortization Schedule

Principal borrowed: 50,000

Total payments: 36

Annual interest rate 10.00% (monthly rate = 0.8333%)

Payment #	Total Payment	Principal Portion of Payment	Interest Expense Portion of Payment	Remaining Principal Balance
Beginning balance =				50,000.00
1	1613.36	1196.69	416.67	48403.31
2	1613.36	1206.67	406.69	47596.64
3	1613.36	1216.72	396.64	46379.92
4	1613.36	1226.86	386.50	45153.06
5	1613.36	1237.08	376.28	43915.98
6	1613.36	1247.39	365.97	42668.58

Practice Exercise 221: Loan Amortization

This exercise illustrates a different principal amount than Example 22A, but computed at the same monthly interest rate and the same number of payments.

Required

Compute the first six months of a loan amortization schedule with a principal balance of 60,000, an interest rate of ten percent, and a payment period of three years or thirty-six months.

Loan Amortization Schedule

Principal borrowed: 60,000

Total payments: 36

Annual interest rate 10.00% (monthly rate = 0.8333%)

Payment #	Total Payment	Principal Portion of Payment	Interest Expense Portion of Payment	Remaining Principal Balance
Beginning balance =				60,000.00
1
2
3
4
5
6