Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If you continue browsing the site, you agree to the use of cookies on this website. See our User Agreement and Privacy Policy.

Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If you continue browsing the site, you agree to the use of cookies on this website. See our Privacy Policy and User Agreement for details.

Like this presentation? Why not share!

- Amortization by LanMilland66 822 views
- How to Create an Amortization Calcu... by Rich Pinoy Online 3517 views
- Financial management; loan amortiza... by Amir Ikram 2583 views
- Business Math Chapter 5 by Nazrin Nazdri 12478 views
- Amortized by 8neutron8 1861 views
- Depreciation & Amortisation by Saran Raj 2510 views

2,688 views

Published on

No Downloads

Total views

2,688

On SlideShare

0

From Embeds

0

Number of Embeds

2

Shares

0

Downloads

125

Comments

0

Likes

4

No embeds

No notes for slide

- 1. Amortization
- 2. <ul><li>Amortization – a debt-repayment scheme wherein the original amount borrowed is repaid by making equal payments periodically </li></ul><ul><li>In amortization problems, we usually want to find the following values: </li></ul><ul><ul><li>Periodic payment </li></ul></ul><ul><ul><li>Outstanding principal at the end of any period </li></ul></ul><ul><ul><li>Interest payment for any period </li></ul></ul><ul><ul><li>Principal repayment for any period </li></ul></ul><ul><ul><li>Final irregular payment, if there is any </li></ul></ul>
- 3. <ul><li>Outstanding principal – refers to the amount of debt still unpaid </li></ul><ul><li>Amortization schedule – a table which shows how a debt is completely repaid through periodic payments, parts of which go to interest payments and principal repayments </li></ul>
- 5. <ul><li>Formulas: </li></ul><ul><li>Periodic payment </li></ul><ul><li>Outstanding principal </li></ul>
- 6. <ul><li>Formulas: </li></ul><ul><li>Interest payment </li></ul><ul><li>Principal repayment </li></ul><ul><li>Total interest (if all payments are regular) </li></ul>
- 7. <ul><li>3. Find R given A = Php 2.75M , j = 8% , m = 1 , and t = 12 years. </li></ul>
- 8. <ul><li>5. Find OB 115 given R = Php 17,315 , i = 1% , and n = 180 . </li></ul>
- 9. <ul><li>9. Find OB 42 given A = Php 1.9M , R = Php 21,525 , j = 10% , and m = 4 . </li></ul>
- 10. <ul><li>17. A loan is to be amortized via equal payments of Php119,764.71 each at the end of six months for 9 years. If the interest is based on 10% compounded semi-annually, find </li></ul><ul><li>a) the original amount of the loan </li></ul><ul><li>b) outstanding principal after the 8 th payment </li></ul><ul><li>c) outstanding principal after the 8 th year. </li></ul>
- 11. <ul><li>17. A loan is to be amortized via equal payments of Php119,764.71 each at the end of six months for 9 years. If the interest is based on 10% compounded semi-annually, find </li></ul><ul><li>a) the original amount of the loan </li></ul>
- 12. <ul><li>17. A loan is to be amortized via equal payments of Php119,764.71 each at the end of six months for 9 years. If the interest is based on 10% compounded semi-annually, find </li></ul><ul><li>b) outstanding principal after the 8 th payment </li></ul>
- 13. <ul><li>17. A loan is to be amortized via equal payments of Php119,764.71 each at the end of six months for 9 years. If the interest is based on 10% compounded semi-annually, find </li></ul><ul><li>c) outstanding principal after the 8 th year. </li></ul>
- 14. <ul><li>19. Goriotik obtains a Php13M bank loan at 12% interest compounded semi-annually to construct another studio. The company repays the loan by paying Php0.5M every 6 months. What is the outstanding principal after the 10 th payment? </li></ul>
- 15. <ul><li>21. A Php1.75M loan is to be repaid through annual payments of Php360,000. Construct an amortization schedule up to the end of the third period if effective interest rate is 9%. </li></ul>
- 16. Period Regular payment Interest payment Principal repayment Outstanding balance
- 17. Period Regular payment Interest payment Principal repayment Outstanding balance 0 1,750,000 1 2 3
- 18. Period Regular payment Interest payment Principal repayment Outstanding balance 0 1,750,000 1 360,000 157,500 202,500 1,547,500 2 3
- 19. Period Regular payment Interest payment Principal repayment Outstanding balance 0 1,750,000 1 360,000 157,500 202,500 1,547,500 2 360,000 139,275 220,725 1,326,775 3
- 20. Period Regular payment Interest payment Principal repayment Outstanding balance 0 1,750,000 1 360,000 157,500 202,500 1,547,500 2 360,000 139,275 220,725 1,326,775 3 360,000 119,409.75 240,590.25 1,086,184.75
- 21. <ul><li>25. A loan of Php400,000 with interest at 8% payable semi-annually is to be amortized through equal semi-annual payments for 5 years. </li></ul><ul><li>a) Find the amount of each semi-annual payment. </li></ul><ul><li>b) How much of the 6 th payment goes to interest payment? How much is allocated for repayment of principal? </li></ul><ul><li>c) How much is the total interest paid? </li></ul>
- 22. <ul><li>25. A loan of Php400,000 with interest at 8% payable semi-annually is to be amortized through equal semi-annual payments for 5 years. </li></ul><ul><li>a) Find the amount of each semi-annual payment. </li></ul>
- 23. <ul><li>25. A loan of Php400,000 with interest at 8% payable semi-annually is to be amortized through equal semi-annual payments for 5 years. </li></ul><ul><li>b) How much of the 6 th payment goes to interest payment? How much is allocated for repayment of principal? </li></ul>
- 24. <ul><li>25. A loan of Php400,000 with interest at 8% payable semi-annually is to be amortized through equal semi-annual payments for 5 years. </li></ul><ul><li>c) How much is the total interest paid? </li></ul>
- 25. <ul><li>27. How much will be the quarterly amortization for a Php1.34M loan with interest at 10% converted quarterly for a term of 6 years? How much interest will be paid on the 4th payment? What is the outstanding principal in 5 years? </li></ul>
- 26. <ul><li>27. How much will be the quarterly amortization for a Php1.34M loan with interest at 10% converted quarterly for a term of 6 years? How much interest will be paid on the 4th payment? What is the outstanding principal in 5 years? </li></ul>
- 27. <ul><li>27. How much will be the quarterly amortization for a Php1.34M loan with interest at 10% converted quarterly for a term of 6 years? How much interest will be paid on the 4th payment? What is the outstanding principal in 5 years? </li></ul>
- 28. <ul><li>27. How much will be the quarterly amortization for a Php1.34M loan with interest at 10% converted quarterly for a term of 6 years? How much interest will be paid on the 4th payment? What is the outstanding principal in 5 years? </li></ul>
- 29. <ul><li>29. To restructure a loan payment supposedly due now, a debtor agrees to Php111,500 payment at the end of each 6 months for 4 years including interest payments at 7%, m = 2. </li></ul><ul><li>a) Determine the outstanding principal after the 4 th payment. </li></ul><ul><li>b) What part of the 7 th payment is interest payment? </li></ul><ul><li>c) What part of the 7 th payment is allotted for principal repayment? </li></ul>
- 30. <ul><li>29. To restructure a loan payment supposedly due now, a debtor agrees to Php111,500 payment at the end of each 6 months for 4 years including interest payments at 7%, m = 2. </li></ul><ul><li>a) Determine the outstanding principal after the 4 th payment. </li></ul>
- 31. <ul><li>29. To restructure a loan payment supposedly due now, a debtor agrees to Php111,500 payment at the end of each 6 months for 4 years including interest payments at 7%, m = 2. </li></ul><ul><li>b) What part of the 7 th payment is interest payment? </li></ul>
- 32. <ul><li>29. To restructure a loan payment supposedly due now, a debtor agrees to Php111,500 payment at the end of each 6 months for 4 years including interest payments at 7%, m = 2. </li></ul><ul><li>c) What part of the 7 th payment is allotted for principal repayment? </li></ul>
- 33. <ul><li>Final irregular payment </li></ul><ul><ul><li>When n is not an integer, a smaller final payment is needed to completely settle a debt </li></ul></ul><ul><ul><li>Unless specified, this final payment is made one period after the last regular payment </li></ul></ul><ul><li>Formulas: </li></ul>
- 34. <ul><li>1. A debt of Php450,000 will be amortized by semi-annual payments of Php58,000 for as long as necessary. If interest is paid at 5 ½% compounded semi-annually, find </li></ul><ul><li>a) the number of full payments </li></ul><ul><li>b) the final or concluding payment </li></ul>
- 35. <ul><li>1. A debt of Php450,000 will be amortized by semi-annual payments of Php58,000 for as long as necessary. If interest is paid at 5 ½% compounded semi-annually, find </li></ul><ul><li>a) the number of full payments </li></ul>
- 36. <ul><li>1. A debt of Php450,000 will be amortized by semi-annual payments of Php58,000 for as long as necessary. If interest is paid at 5 ½% compounded semi-annually, find </li></ul><ul><li>b) the final or concluding payment </li></ul>
- 37. <ul><li>3. A Php25,000 office equipment is bought with a downpayment of Php5,000 and monthly installments of Php2,000. If the buyer pays 18% interest compounded monthly, </li></ul><ul><li>a) how much will be the outstanding principal after the 5 th installment? </li></ul><ul><li>b) how much interest is paid on the 9 th installment? </li></ul><ul><li>c) how much of the principal has been reduced by the 7 th installment? </li></ul><ul><li>d) what is the final irregular installment? </li></ul>
- 38. <ul><li>3. A Php25,000 office equipment is bought with a downpayment of Php5,000 and monthly installments of Php2,000. If the buyer pays 18% interest compounded monthly, </li></ul><ul><li>a) how much will be the outstanding principal after the 5 th installment? </li></ul>
- 39. <ul><li>3. A Php25,000 office equipment is bought with a downpayment of Php5,000 and monthly installments of Php2,000. If the buyer pays 18% interest compounded monthly, </li></ul><ul><li>b) how much interest is paid on the 9 th installment? </li></ul>
- 40. <ul><li>3. A Php25,000 office equipment is bought with a downpayment of Php5,000 and monthly installments of Php2,000. If the buyer pays 18% interest compounded monthly, </li></ul><ul><li>c) how much of the principal has been reduced by the 7 th installment? </li></ul>
- 41. <ul><li>3. A Php25,000 office equipment is bought with a downpayment of Php5,000 and monthly installments of Php2,000. If the buyer pays 18% interest compounded monthly, </li></ul><ul><li>d) what is the final irregular installment? </li></ul>

No public clipboards found for this slide

Be the first to comment