LOAN AMORTISATION SCHEDULES
Example
A man takes out a personal loan of R10,000 with an annual interest rate of 6% compounded twice a
year for 3 years.
How large are his semester payments?
How much interest will he pay?
Prepare an amortization table.
Use ordinary operational calculations initially
Use the specific formulaes indicated in bold
Periodic Payment:
Nominal Rate: 6.00%
Periods per Year:
Periodic Rate:
Years: 3
Number of Periods: 2
Present Value: R10,000.00
Total Interest:
PAYMENT NO PAYMENT INTEREST PAYMENT PRINCIPAL PAYMENT BALANCE
PERIOD CALCULATIONS CALCULATIONS
PMT IPMT PPMT
0
1
2
3
4
5
6
PAYMENT NO PAYMENT INTEREST PAYMENT PRINCIPAL PAYMENT BALANCE
PERIOD CALCULATIONS CALCULATIONS
PMT IPMT
0 0 0 0 R10,000.00
1 R1,845.98 R 300.00 R1,545.98 R8,454.02
2 R1,845.98 R 253.62 R1,592.35 R6,861.67
3 R1,845.98 R 205.85 R1,640.12 R5,221.55
4 R1,845.98 R 156.65 R1,689.33 R3,532.22
5 R1,845.98 R 105.97 R1,740.01 R1,792.21
6 R1,845.98 R 53.77 R1,792.21 R0.00
1
Exercises
1. A man takes out a loan of R5,000 with an annual interest rate of 11.6% compounded quarterly at the
beginning of the year for 4 years.
How large are his quarterly payments?
How much interest will he pay?
Prepare an amortization table.
Create a line graph illustrating the decline in the balance due.
2. A couple takes out a 30-year mortgage of R100,000 with annual interest rate of 9.6% compounded
monthly.
What is the size of their monthly payment?
How much interest will they pay?
Prepare an amortization table.
3. A couple takes out a 25-year mortgage of R285,000 with an annual interest rate of 8.6%
compounded quarterly.
What is the size of their quarterly payment?
How much interest will they pay?
Prepare an amortization table.
4. A couple takes out a 20-year mortgage of R3 million with an annual rate of 11.25% compounded
four-monthly
What is the size of their monthly payment?
How much interest will they pay?
Prepare an amortization table.
5. A woman borrows R18,000 to buy a new car. The personal loan has annual interest rate of 5.4% per
annum compounded monthly for five years.
What is the size of her monthly payment?
How much interest will she pay?
Find the annual percentage rate.
Prepare an amortization table.
6. A couple invest R1,350 every month for 5 years into a retirement annuity and earns an annual
interest rate of 6.5% per annum.
Calculate what the future value of the annuity?
Prepare an amortization table.
Calculate the total interest earned in year 1
Calculate the total interest earned at the end of year 3
Calculate the total interest earned in year 5
7. A couple invest R5 000 every quarter for 8years into a retirement annuity and earns an annual
interest rate of 6.5% annum.
Calculate what the future value of the annuity?
Prepare an amortization table.
Calculate the total interest earned in year 2
Calculate the total interest earned at the end of year 4
Calculate the total interest earned in year 6
Calculate the total interest earned on the annuity after 8 years
8. A couple invest R1,350 very six months for 30 years into a retirement account earning 4.7%
compounded twice per annum (bi-annually). At the end of that time they plan to withdraw a fixed
amount each month for 20 years at which time the account balance will be reduced to zero.
How much will they be able to withdraw each month.
How much total interest will they earn throughout the 50-year span?
Find the annual percentage yield for this investment.
Prepare a table that shows the change in the account balance over the entire 50-year span.
Create a line graph illustrating the change in the account balance over the entire 50-year span.