**Loan Amortization Table Explanation** This table demonstrates the monthly loan amortization of a $2,500.00 loan at an annual interest rate of 9%, compounded monthly (0.75% per month). A $150.00 payment is made at the end of each month. | Month | Prior Balance | 0.75% Interest on Prior Balance | Monthly Payment | Ending Balance | |-------|---------------|---------------------------------|----------------|----------------| | 0 | $2,500.00 | $18.75 | $150.00 | $2,368.75 | | 1 | $2,368.75 | $17.77 | $150.00 | $2,236.52 | | 2 | $2,236.52 | $16.77 | $150.00 | $2,103.29 | | 3 | | | | | | 4 | | | | | | 5 | | | | | **Instructions:** - **Prior Balance:** The amount remaining from the previous month. - **0.75% Interest on Prior Balance:** The monthly interest amount calculated at 0.75% of the prior balance. - **Monthly Payment:** A fixed monthly payment of $150.00. - **Ending Balance:** The remaining balance after the monthly payment is made, calculated as: \[ \text{Ending Balance} = \text{Prior Balance} + \text{Interest} - \text{Monthly Payment} \] This table outlines the first three months of repayment. Calculating subsequent rows follows the same process, showcasing how both principal and interest affect the remaining loan balance over time.
**Loan Amortization Table Explanation** This table demonstrates the monthly loan amortization of a $2,500.00 loan at an annual interest rate of 9%, compounded monthly (0.75% per month). A $150.00 payment is made at the end of each month. | Month | Prior Balance | 0.75% Interest on Prior Balance | Monthly Payment | Ending Balance | |-------|---------------|---------------------------------|----------------|----------------| | 0 | $2,500.00 | $18.75 | $150.00 | $2,368.75 | | 1 | $2,368.75 | $17.77 | $150.00 | $2,236.52 | | 2 | $2,236.52 | $16.77 | $150.00 | $2,103.29 | | 3 | | | | | | 4 | | | | | | 5 | | | | | **Instructions:** - **Prior Balance:** The amount remaining from the previous month. - **0.75% Interest on Prior Balance:** The monthly interest amount calculated at 0.75% of the prior balance. - **Monthly Payment:** A fixed monthly payment of $150.00. - **Ending Balance:** The remaining balance after the monthly payment is made, calculated as: \[ \text{Ending Balance} = \text{Prior Balance} + \text{Interest} - \text{Monthly Payment} \] This table outlines the first three months of repayment. Calculating subsequent rows follows the same process, showcasing how both principal and interest affect the remaining loan balance over time.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![**Loan Amortization Table Explanation**
This table demonstrates the monthly loan amortization of a $2,500.00 loan at an annual interest rate of 9%, compounded monthly (0.75% per month). A $150.00 payment is made at the end of each month.
| Month | Prior Balance | 0.75% Interest on Prior Balance | Monthly Payment | Ending Balance |
|-------|---------------|---------------------------------|----------------|----------------|
| 0 | $2,500.00 | $18.75 | $150.00 | $2,368.75 |
| 1 | $2,368.75 | $17.77 | $150.00 | $2,236.52 |
| 2 | $2,236.52 | $16.77 | $150.00 | $2,103.29 |
| 3 | | | | |
| 4 | | | | |
| 5 | | | | |
**Instructions:**
- **Prior Balance:** The amount remaining from the previous month.
- **0.75% Interest on Prior Balance:** The monthly interest amount calculated at 0.75% of the prior balance.
- **Monthly Payment:** A fixed monthly payment of $150.00.
- **Ending Balance:** The remaining balance after the monthly payment is made, calculated as:
\[
\text{Ending Balance} = \text{Prior Balance} + \text{Interest} - \text{Monthly Payment}
\]
This table outlines the first three months of repayment. Calculating subsequent rows follows the same process, showcasing how both principal and interest affect the remaining loan balance over time.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1cff5689-7bd0-475a-a8ff-9b9e13f1a527%2Ff18e6f6f-a3a6-4744-86fe-48a64ce2d489%2Fv12ku5a.jpeg&w=3840&q=75)
Transcribed Image Text:**Loan Amortization Table Explanation**
This table demonstrates the monthly loan amortization of a $2,500.00 loan at an annual interest rate of 9%, compounded monthly (0.75% per month). A $150.00 payment is made at the end of each month.
| Month | Prior Balance | 0.75% Interest on Prior Balance | Monthly Payment | Ending Balance |
|-------|---------------|---------------------------------|----------------|----------------|
| 0 | $2,500.00 | $18.75 | $150.00 | $2,368.75 |
| 1 | $2,368.75 | $17.77 | $150.00 | $2,236.52 |
| 2 | $2,236.52 | $16.77 | $150.00 | $2,103.29 |
| 3 | | | | |
| 4 | | | | |
| 5 | | | | |
**Instructions:**
- **Prior Balance:** The amount remaining from the previous month.
- **0.75% Interest on Prior Balance:** The monthly interest amount calculated at 0.75% of the prior balance.
- **Monthly Payment:** A fixed monthly payment of $150.00.
- **Ending Balance:** The remaining balance after the monthly payment is made, calculated as:
\[
\text{Ending Balance} = \text{Prior Balance} + \text{Interest} - \text{Monthly Payment}
\]
This table outlines the first three months of repayment. Calculating subsequent rows follows the same process, showcasing how both principal and interest affect the remaining loan balance over time.
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