Solution to the Loan Amortization

Prepared by Pamela Peterson Drake

Problem

Given information

APR = 10%
Semi-annual rate = 5%
PV (loan) = $20,000
NPER = 6

Solve for the semi-annual payment

PMT = $3,940.35

Amortize the loan

Period
(6-month period)
Beginning of the
year balance

Payment

Interest

Principal in
payment

Ending principal

1 $20,000.00 $3,940.35 $1,000.00 $2,940.35 $17,059.65
2 $17,059.65 $3,940.35 $852.98 $3,087.37 $13,972.28
3 $13,972.28 $3,940.35 $698.61 $3,241.74 $10,730.55
4 $10,730.55 $3,940.35 $536.53 $3,403.82 $7,326.73
5 $7,326.73 $3,940.35 $366.34 $3,574.01 $3,752.71
6 $3,752.71 $3,940.35 $187.64 $3,752.71 $0.00