The debt is amortized by equal payments made at the end of...

Name: the debt is amortized by equal payments made at the end of each payment interval compute a the size of the periodic payments b the outstanding principal at the time indicated c the interest 39581
Uploaded: 2023-09-20T03:40:23-08:00
Duration: 3 min 46 s
Channel: Madhur L
Description: the debt is amortized by equal payments made at the end of each payment interval compute a the size of the periodic payments b the outstanding principal at the time indicated c the interest 39581

The debt is amortized by equal payments made at the end of each payment interval. Compute (a) the size of the periodic payments; (b) the outstanding principal at the time indicated; (c) the interest paid by the payment following the time indicated; and (d) the principal repaid by the payment following the time indicated for finding the outstanding principal. Debt Principal $15,000 Repayment Period 6 years Payment Interval 1 month Interest Rate 3% Conversion Period monthly Outstanding Principal After: 7th payment

Transcript

00:01 Hi, here for the given question, the formula which we are going to use is pmt equals to for the periodic payment p into r into 1 plus r to the power n divided by 1 plus r to the power n minus 1.

00:15 So here in our case, we are given that principal amount p equals to $18 ,000.

00:23 Further, the rate of interest r is equal to 6 percentage divided by 12.

00:28 This is the annual rate of interest.

00:29 So this is equal to 0 .005 and the total number of payment n is equal to 8 into 12, which is equal to 96.

00:38 So here in our case, now using the value, pmt can be calculated as 18 ,000 into 0 .005 into 1 plus 0 .005 to the power 96 divided by 1 plus 0 .005 to the power 96 minus 1.

00:56 So calculating this value, we have the periodic payment pmt equals to here in our case, this is $254 .63.

01:08 So this is the solution of the first part.

01:10 Now here for the second part of the question, we need to find the outstanding value for the eighth payment.

01:16 So here in our case, the outstanding value after the eighth payment can be calculated as here in our case, pmt into 1 minus 1 plus r to the power minus n divided by r.

01:32 So here in our case, now on simplifying this, we have 254 into 63 multiplied with 1 minus 1 plus 0 .005 to the power minus 96 divided by 0 .05.

01:47 So here in our case, by calculating this value, we can say that the outstanding value after eighth payment is $15 ,529 .91.

02:00 So now moving towards the third part of the question, we need to calculate what is the value of interest paid.

02:07 So here in our case, interest after the ninth payment can be calculated using the formula pmt minus outstanding payment...

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