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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.

asked by Katelyn
  1. 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.

    posted by Jennifer
  2. A debt of $5000 is to be amortized with 6 equal semiannual payments. If the interest rate is 9%, compounded semiannually, what is the size of each payment

    posted by Anonymous

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