a math student borrowed $9300.00 from his local bank at 7% compounded quarterly to pay for his studies. the loan is to be repaid by equal payments at the end of every quarter over a two year term.
a)construct the amortization schedule for the loan.
b)calculate the total interest.
first find the payment, let it be p
9000 = p (1 - 1.0175^-8)/.0175
I get p = 1215.39
make the following columns, (or follow your notes or text)
Time -- p (payment) -- interest -- repayment -- Balance
here are my first 3 rows, notice they don't line up
I will use 0 for "Now" , at now we don't have any payments or interest yet, the "time" would be in quarter years
0 0 0 0 9000
1 1215.39 157.50 1057.89 7942.11
2 1215.39 138.99 1076.40 6865.71
3 1215.39 120.15 1095.24 5770.05
etc
I was off by 3 cents, due to round-off
b) add up the interest column