question archive A bank recently loaned Mr
A bank recently loaned Mr
Subject:FinancePrice:2.86 Bought22
A bank recently loaned Mr. A $150,000 to buy a house. The loan is for 30 years and is fully amortized. The nominal rate on the loan is 8 percent, and payments are made at the end of each month (Constant Payment Mortgage). What will be the repayment of principal part of the fourth monthly payment? (Answer is rounded)
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Amount Borrowed = 1,50,000
Periods = 12*30 = 360
rate = (8/100)/12 = 0.006666667
Payment = ? 1,100.65
EMI = ( P * r * (1+r)n ) / ((1+r)n - 1)
P = 150000,
r = 0.08/12 i.e. 0.00666,
n = 30*12 =360
EMI = ( 150000 * 0.006666 * (1.006666)360) / (1.006666)360- 1
= 1000 (10.935729657755573) / (10.935729657755573) - 1
= 10935.7296 / 9.935729657755573
= 1100.65
EMI Will be 1100.65.
the repayment of principal part of the fourth monthly payment will be 102.67 (i.e. 103)
Interest = Opening Balance * Rate of Interest per period
Principal Part = EMI - Interest
We can make loan repayment schedule on Excel where you can find any months closing balance.
| Months | Beginning Bal | Payment | Interest | Principal | Ending Balance |
| 1 | 1,50,000 | ? 1,100.65 | 1,000 | ? 100.65 | 1,49,899.35 |
| 2 | 1,49,899.35 | ? 1,100.65 | 999.33 | ? 101.32 | 1,49,798.04 |
| 3 | 1,49,798.04 | ? 1,100.65 | 998.65 | ? 101.99 | 1,49,696.04 |
| 4 | 1,49,696.04 | ? 1,100.65 | 997.97 | ? 102.67 | 1,49,593.37 |
| 5 | 1,49,593.37 | ? 1,100.65 | 997.29 | ? 103.36 | 1,49,490.01 |
