Amortize a 6% loan of $25,000 that is paid back in four annual
end-of-period installments.
Note: Place your cursor over a value to determine how to
calculate it.
Step 1: Determine the given information
Rate |
i |
= |
6% |
Loaned amount |
PV |
= |
$25,000 |
Number of payments |
N |
= |
4 |
Step 2: Solve for the payment amount
Payment |
PMT |
= |
$7,214.79 |
Step 3: Amortize the loan, breaking the payment into
interest and principal repayments
Year |
Beginning of the year
balance |
Payment |
Interest |
Principal in payment |
Ending principal |
1 |
$25,000.00 |
$7,214.79 |
$1,500.00 |
$5,714.79 |
$19,285.21 |
2 |
$19,285.21 |
$7,214.79 |
$1,157.11 |
$6,057.67 |
$13,227.54 |
3 |
$13,227.54 |
$7,214.79 |
$793.65 |
$6,421.14 |
$6,806.40 |
4 |
$6,806.40 |
$7,214.79 |
$408.38 |
$6,806.40 |
$0.00 |
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