Answered: 1. A loan of P12, 500 is to be repaid…

1. A loan of P12, 500 is to be repaid with equal quarterly payments for one year with an interest of 6% compounded quarterly. Find the quarterly payment and construct an amortization schedule.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

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1. A loan of P12, 500 is to be repaid with equal quarterly payments for one year with an interest of 6% compounded quarterly. Find the quarterly payment and construct an amortization schedule.

2. Semi-annual payments of P1, 350 each are used to repay a loan for 3 ½ years at 5% compounded semiannually. Find the amount of the loan and construct the first four rows of the amortization table.

3. An obligation of P35, 000 is to be repaid with equal monthly payments for 6 months with an interest of 15% compounded monthly. Find the monthly payment and construct an amortization schedule.

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