Posted by **Katelyn** on Tuesday, December 11, 2012 at 10:11pm.

A $15,000 debt is to be amortized in 12 equal semiannual payments at 5.5% interest per half-year on the unpaid balance. Construct an amortization table to determine the unpaid balance after two payments have been made. Round values in the table to the nearest cent.

- math -
**Jennifer**, Thursday, December 13, 2012 at 10:45am
The formula for calculating the payment amount is shown below.

A = P * ((r(1+r)^n)/(((1+r)^n)-1)

Simple Amortization Calculation Formula

where

A = payment Amount per period

P = initial Principal (loan amount)

r = interest rate per period

n = total number of payments or periods

A = 15000 * ((0.055(1.055)^12)/(((1.055)^12) - 1)

A = 15000 * ((0.055*1.9012)/.9012)

A = 1,740.44

Year 1, first payment: $1740.44 Interest paid = balance * 0.055 = $15000*.055 = $825

Principal paid = payment - interest = $ 1740.44 - 825 = 915.00

Balance = 15000 - 915 = 14085

Year 1, 2nd payment: $1740.44

Interest paid = balance * 0.055 = $14085*.055 = $774.68

Principal paid = payment - interest = $ 1740.44 - 774.68 = 965.76

Balance = 14085 - 965.76 = 13119

13119 is the unpaid balance after 2 payments.

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