you take a car loan worth 10k, for 6 years and make monthly payments. The going annual rate of interest on such loans is 5%. How much interest will you have LEFT to pay after 3 years.
I guess we need AMORT function in calculator, but don’t know how to do. Also it is not required for L1, right?
PV 10,000 N 6*12 = 72 I/Y 5/12 Cpt Pmt 2nd Amort P1- 1 P2 - 36 Bal - 5374 Prn - 4626 Int - 1171 Bal 5374 is the Answer This sure is a L1 problem. Here is what they may ask. Is interest greater or less than principle in the early years of a loan? Ans - Loan amortization means Interest is paid first, then Principle. Think of it like a box. Draw a line from the top left corner to the bottom right corner. The bottom is interest, the top is principle. Thats how amortization works.
I got the answer as 425.21 but i am using excel, need to learn how to do this with calculator, using 12c here.
Is mine correct?
KJH Wrote: ------------------------------------------------------- > Is mine correct? I would say no. I got 425.21.
KJH Wrote: ------------------------------------------------------- > PV 10,000 > N 6*12 = 72 > I/Y 5/12 > Cpt Pmt > > 2nd Amort P1- 1 P2 - 36 > > Bal - 5374 Prn - 4626 Int - 1171 > > Bal 5374 is the Answer > > This sure is a L1 problem. Here is what they may > ask. Is interest greater or less than principle > in the early years of a loan? > > Ans - Loan amortization means Interest is paid > first, then Principle. Think of it like a box. > Draw a line from the top left corner to the bottom > right corner. The bottom is interest, the top is > principle. Thats how amortization works. Thanks for the post. I mean L1 may not require you to use ARMOT function in exam. Of course, we need to understand the concept. If it asks for first few periods interest, I can do with pen and paper.
Hmm…can anyone contest what I’m doing wrong?
KJH Wrote: ------------------------------------------------------- > Is mine correct? From intuition, it should be wrong. Since total interest is 7208. The leftover should be much less than half at this point.
KJH Wrote: ------------------------------------------------------- > Hmm…can anyone contest what I’m doing wrong? You are reading the question wrong. The question asks for last 3 yrs int, not first. haha got you!!!
hopetobeat Wrote: ------------------------------------------------------- > KJH Wrote: > -------------------------------------------------- > ----- > > Is mine correct? > > > From intuition, it should be wrong. Since total > interest is 7208. The leftover should be much > less than half at this point. Total interest is 7208? Well you are wrong too. I get total interest less than 2k.
Ok, now I got $424.25 You set P1 - 37 P2 - 72. This is the amount left after 3 years.
pepp Wrote: ------------------------------------------------------- > hopetobeat Wrote: > -------------------------------------------------- > ----- > > KJH Wrote: > > > -------------------------------------------------- > > > ----- > > > Is mine correct? > > > > > > From intuition, it should be wrong. Since > total > > interest is 7208. The leftover should be much > > less than half at this point. > > > Total interest is 7208? Well you are wrong too. I > get total interest less than 2k. ya, my calculator stuck. should be 1595. 