- 20 Marks
Question
A loan of GH¢3,000 at an effective annual interest rate of i = 12% is amortized by means of 12 annual payments, beginning a year after the loan is taken.
Hint: The schedule should have the following columns: Payment, Interest Due, Principal Repaid, and Outstanding Balance.
Required:
Construct an amortization schedule.
Answer
p = 3000, i = 0.02, r = 0.02, t = 1
A = P (1 + rt)
A = 3000(1 + 0.02) = 3060
Amortization Schedule:
- Tags: Compound Interest, Effective Interest, Loan amortization, Schedules
- Level: Level 1
- Topic: Mathematics of Business Finance
- Series: MAY 2016
- Uploader: Kwame Aikins