Loan Amortization Schedule

Amount Borrowed
Number of Years
Basis
Periods
Rate of Interest
Periodic Rate of Interest
Payment

SEMI ANNUAL PERIOD Opening Balance PAYMENT

1 ₹ 500,000.00 ₹ 72,842.96
2 ₹ 464,657.04 ₹ 72,842.96
3 ₹ 426,663.36 ₹ 72,842.96
4 ₹ 385,820.15 ₹ 72,842.96
5 ₹ 341,913.70 ₹ 72,842.96
6 ₹ 294,714.27 ₹ 72,842.96
7 ₹ 243,974.88 ₹ 72,842.96
8 ₹ 189,430.03 ₹ 72,842.96
9 ₹ 130,794.33 ₹ 72,842.96
10 ₹ 67,760.94 ₹ 72,842.96
 ₹ 500,000.00
5
SEMI ANNUAL
10
15%
7.50%
₹ 72,842.96

Interest Principal Ending Balance

₹ 37,500.00 ₹ 35,342.96 ₹ 464,657.04
₹ 34,849.28 ₹ 37,993.68 ₹ 426,663.36
₹ 31,999.75 ₹ 40,843.21 ₹ 385,820.15
₹ 28,936.51 ₹ 43,906.45 ₹ 341,913.70
₹ 25,643.53 ₹ 47,199.43 ₹ 294,714.27
₹ 22,103.57 ₹ 50,739.39 ₹ 243,974.88
₹ 18,298.12 ₹ 54,544.84 ₹ 189,430.03
₹ 14,207.25 ₹ 58,635.71 ₹ 130,794.33
₹ 9,809.57 ₹ 63,033.39 ₹ 67,760.94
₹ 5,082.07 ₹ 67,760.89 ₹ 0.05
 Sinking Funds

Suppose a machine costing ₹100000 is to be replaced at the end of 10 years, at

which time it will have a salvage value of ₹ 5,000. In order to provide money at that
time for a machine costing the same amount, a sinking fund is set-up. The amount
of fund at that time is to be difference between the replacement cost and salvage
value. If equal payments are placed in the fund at the end of each HALF YEAR, and
the fund earns 10% compounded SEMI ANNUALLY, what should each payment be?
Amount Needed 95000
Rate of Interest 10% pa
Years 10
Number of Periods 20
Payments ₹ 2,873.05

Period Initial Amount PMT Interest Final Amount

1 0 ₹ 2,873.05 0 2873.05
2 2873.05 ₹ 2,873.05 143.65 5889.74
3 5889.74 ₹ 2,873.05 294.49 9057.28
4 9057.28 ₹ 2,873.05 452.86 12383.19
5 12383.19 ₹ 2,873.05 619.16 15875.39
6 15875.39 ₹ 2,873.05 793.77 19542.21
7 19542.21 ₹ 2,873.05 977.11 23392.36
8 23392.36 ₹ 2,873.05 1169.62 27435.03
9 27435.03 ₹ 2,873.05 1371.75 31679.82
10 31679.82 ₹ 2,873.05 1583.99 36136.86
11 36136.86 ₹ 2,873.05 1806.84 40816.75
12 40816.75 ₹ 2,873.05 2040.84 45730.63
13 45730.63 ₹ 2,873.05 2286.53 50890.21
14 50890.21 ₹ 2,873.05 2544.51 56307.77
15 56307.77 ₹ 2,873.05 2815.39 61996.20
16 61996.20 ₹ 2,873.05 3099.81 67969.06
17 67969.06 ₹ 2,873.05 3398.45 74240.56
18 74240.56 ₹ 2,873.05 3712.03 80825.63
19 80825.63 ₹ 2,873.05 4041.28 87739.96
20 87739.96 ₹ 2,873.05 4387.00 95000.00
 Leontief Input-Output Model
A THREE SECTOR ECONOMY HAS THE FOLLOWING INPUT OUTPUT COEFFICIENT MATRIX AS GIVEN BELOW . THE LA
UNIT OF OUTPUT OF THE THREE SECTORS ARE 0.4,0.7 AND 1.2 RESPECTIVELY AND THEIR CONSUMER OUTPUT TAR
UNITS RESPECTIVELY. THE WAGE RATE IS RS 10 PER LABOUR DAY.BY USING MATRIX ALGEBRA,YOU ARE REQUIRED
(1) THE GROSS OUTPUT OF EACH SECTOR
(2) TOTAL LABOUR DAYS
(3) EQUILIBRIUM PRICE
(4) TOTAL VALUE ADDED

Finding the
input-output 0 0.5 0
coefficient
matrix A 0.2 0 0.5
0.4 0 0

X1 BE THE GROSS OUTPUT VECTOR

LET X= X2
X3

1000
D= 5000
4000

X=AX+D OR (I-A)X=D

1 0 0
I= 0 1 0
0 0 1

I-A= 1 -0.5 0
-0.2 1 -0.5
-0.4 0 1

det(I-A)= 0.8

(I-A)^(-1)= #NAME? #NAME? #NAME?

#NAME? #NAME? #NAME?
#NAME? #NAME? #NAME?
x= #NAME?
#NAME?
#NAME?

ANS (1)- Hence the gross output levels of 3 sectors are 5625,9250 and 6250 u

labour reqd per unit of output 0.4 0.7

ANS (2)- total labour days requred #NAME?

let p1 be the equilibrium pric

p2
p3

[(I-A)^(-1)]'= #NAME? #NAME?

#NAME? #NAME?
#NAME? #NAME?

l1w 4
l2w 7
l3w 12

p1 #NAME?
p2 #NAME?
p3 #NAME?

ans (3)- hence equilibrium prices are:p1=rs14.5,p2=rs 14.25, p3= rs 19.125

total value added #NAME?

Model
ATRIX AS GIVEN BELOW . THE LABOUR DAYS REQUIRED PER
THEIR CONSUMER OUTPUT TARGETS ARE 1000,5000 AND 4000
X ALGEBRA,YOU ARE REQUIRED TO FIND
ectors are 5625,9250 and 6250 units respectively

1.2

be the equilibrium prices

#NAME?
#NAME?
#NAME?

rs 14.25, p3= rs 19.125

 OBJECTIVE FUNCTION
X= COST OF FOOD A
Y= COST OF FOOD B
MINIMIZE Z=4X+3Y

ingredientsfood A
vitamins 200
mineral 1
calories 40
constraints
200X+100Y >= 4000
1X+2Y >= 50
40X+40Y >= 1400
X >= 0
Y >= 0
FOOD A FOOD B
units 5 30
cost per unit 4 3 minimum c 110
Food B
100 4000 >= 4000
2 65 >= 50
40 1400 >= 1400

5 >= 0
30 >= 0
Using Solver for
1 Maximization
2 Minimzation

Maximization of Profit
Question
A firm makes two types of furnitures - chairs, and tables.
Profits are ₹20 per chair and ₹30 per table.
Both products are processed on three machines M1, M2 and M3.
The time required for each product in hours and total time
available in hours per week on each machine are as follows:
Machine Chair Table Available Time
M1 3 3 36
M2 5 2 50
M3 2 6 60
How should the manufacturer schedule his production in order
to maximize profit?

Step 1: Formulating the Problem

X Number of Chairs to be produced per week
Y Number of Tables to be produced per week
Z Profit

Maximize: Z = 20X + 30Y

Constraints:
3X + 3Y <= 36
5X + 2Y <= 50
2X + 6Y <= 60
X >= 0
Y >= 0

Step: Identification of Decision Variables

Decision Variables Chair Table
Quantity (Production in week) 3 9 (This is what we need to find)
Profit 20 30

Step: Building the objective function

Objective Function 330

Step: Adding Constraints

Normal Constraints
Machine Chair Table Available Time
M1 3 3 36 <= 36
 M2 5 2 33 <= 50
M3 2 6 60 <= 60

Special Constraints
Chair 3 >= 0 You may get negative value (
Table 9 >= 0 don’t mention the non-negati

Chair Table
Objective Function
Quantity (Production/week) 3 9 Maximum Profit
Profit per Unit (Given) 20 30 330

Constraints
M1 3 3 36 <=
M2 5 2 33 <=
M3 2 6 60 <=

Chair 3 >=
Table 9 >=

Minimzation

Question
The standard weight of a special purpose brick is 5 kg.
This brick contains two basic ingredients B1 and B2.
B1 costs ₹5 per kg, and B2 costs ₹8 per kg.
Strength considerations dictate that the brick contains not
more than 4 kg of B1, and minimum of 2 kg of B2.
Since the demand for the product is likely to be related to the
price of the brick, find the minimum cost of brick statisfying the
above conditions.

1 Objective Function
B1 B2 These are our two ingredients
Weight of Ingredient 3 2 Minimum Cost
 Cost per Unit (Given) 5 8 0

2 Constraints
Total Ingredient 5 =
B1 3 <=
B2 2 >=

B1 3 >=
B2 2 >=

For Continuous Assessment

Ex 4.1 Q10
Ex 4.3 Q13
we need to find)

Available Time
No slack variable
 The second slack variable does not depart 17
No slack variable

You may get negative value (s) for decision-variables if you

don’t mention the non-negative constraint

36
50
60

0
0
5 Total weight of the brick should be 5 kgs
4 Not more than 4 kgs of B1
2 At least 2kg of B2

0
We need both B1 and B2
0
 Adding and Subtracting Matrices

Matrix X Matrix Y
4 5 9 9 10 9
7 4 3 3 8 0
8 12 9 12 12 11

We are given two matrices. How do we add/subtract them?

1 There is no straight function.
2 Define name X and Y by selecting the matrix and changing name.
3 (X-Y), or (X+Y)

X-Y X+Y
-5 -5 0 13 15 18
4 -4 3 10 12 3
-4 0 -2 20 24 20

Multiplying Matrices
We are given two matrices. How do we multiple them?
1 There is a function → MMULT
2 What will be M x N?

Matrix M Matrix N
4 5 7 2 4 1
3 2 9 5 4 9
13 7 8

MXN
124 85 105
133 83 93

Using Names to Multiply Matrices

Matrix K Matrix L
2 7 8 4 4 3
9 7 8 13 13 1
0 8 8 9 5 3

KXL
171 139 37
199 167 58
176 144 32

Finding the Determinant of given Matrix

 When you have a matrix When you have a matrix which
1 Function: MDETERM
labelled with a name is not square
Matrix J Matrix K Matrix M
171 139 37 2 7 8 4
199 167 58 9 7 8 3
176 144 32 0 8 8

|J|= -7840 |K|= 56 |M|=

Finding the Inverse of given Matrix

𝐼𝑛𝑣𝑒𝑟𝑠𝑒=(𝐴𝑑𝑗𝑜𝑖𝑛𝑡 𝑜𝑓 𝑀𝑎𝑡𝑟𝑖𝑥)/(𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑎𝑛
1 Are the conditions for the inverse to exist satisfied?
1 Square matrix.
2 Non-singular matrix. That is |A|=/ 0.
2 Use function =MINVERSE

Matrix U Matrix J Matrix M

1 2 171 139 37 4
2 4 199 167 58 3
176 144 32

𝑈^(−1)= Err:502 𝐽^(−1)= 0.38 -0.11 -0.24

𝑀^(−1)=
Err:502
-0.49 0.13 0.33
0.09 0.02 -0.11

Finding the Adjoint of given Matrix (Using the result of inverse function and determinant function)

𝐼𝑛𝑣𝑒𝑟𝑠𝑒=(𝐴𝑑𝑗𝑜𝑖𝑛𝑡 𝑜𝑓 𝑀𝑎𝑡𝑟𝑖𝑥)/(𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑎𝑛𝑡 𝑜𝑓 𝑀𝑎𝑡𝑟𝑖𝑥)

𝑫𝒆𝒕𝒆𝒓𝒎𝒊𝒏𝒂𝒏𝒕 𝒐𝒇 𝑴𝒂𝒕𝒓𝒊𝒙 (𝑺𝒄𝒂𝒍𝒂𝒓)×𝑰𝒏𝒗𝒆𝒓𝒔𝒆=𝑨𝒅𝒋𝒐𝒊𝒏𝒕 𝒐𝒇 𝑴𝒂𝒕𝒓𝒊𝒙

Matrix J
171 139 37
199 167 58
176 144 32

𝐽^(−1)=
0.38 -0.11 -0.24 |J|= -7840
-0.49 0.13 0.33
0.09 0.02 -0.11
 #NAME? #NAME? #NAME? -3008 880 1883
Adjoint
(adj J) #NAME? #NAME? #NAME? 3840 -1040 -2555
#NAME? #NAME? #NAME? -736 -160 896

Finding the Transpose of a Matrix

There are two ways
1 Paste-special
2 TRANSPOSE function
Using TRANSPOSE Function
Matrix M What is M'?
4 5 7 4 3
3 2 9 5 2
7 9

Leontief Input-Output Model

There are two industries, with the following input-output relationship.

Final Gross
Industry A B Demand Output
A 20 40 40 100
B 30 50 40 120

Capital (₹) 2000 3000

Labour 200 300
Day

Using matrix notations, determine:

1 Gross output required to satisfy the new final demand of 110 units and 220 units for
Industry A and Industry B, respectively.
2 Total requirement of capital and the labor days.
3 Total value addition, if cost of capital is 10% and the labor cost is ₹200 per labor day.
4 Is the system viable?

1 Finding Gross Output

Finding the 0.2 0.333333 110

input-output A Technology Matrix D
coefficient
matrix 0.3 0.416667 220

1 0
I
0 1
 0.8 -0.333333 |I-A| 0.366667
I-A
-0.3 0.583333

X=(I-A)^(-1)*D #NAME? #NAME?

(I-A)^(-1)
#NAME? #NAME?

#NAME?
X
#NAME?

2 Total requirement of capital and the labor days.

20 25
Input Coefficients
2 2.5

#NAME?
Total Requirement
#NAME?

3 Total Value Addition #NAME?

Cost of Labor
Cap Cost
0.1 200

For Continuous Assessment

Example 41 - Three-Sector Economy (Page 2.52)
 1 2
Matrix OX 3 4

4 7
3 3
 When you have a matrix which
is not square
Matrix M
5 7
2 9

Err:502

𝑓 𝑀𝑎𝑡𝑟𝑖𝑥)/(𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑎𝑛𝑡 𝑜𝑓 𝑀𝑎𝑡𝑟𝑖𝑥)

Matrix M
5 7
2 9

determinant function)

𝒋𝒐𝒊𝒏𝒕 𝒐𝒇 𝑴𝒂𝒕𝒓𝒊𝒙
Using Paste-Special
What is M'?
4 3
5 2
7 9
 Topics
1 Present Value
2 Future Value
3 Effective and Nominal Interest Rate
4 Amortization of Funds
1 Interest in Payment IPMT
2 Principal in Payment PPMT
3 Payment PMI
5 Sinking Funds
6 Rate Function
7 Schedule of FV

PRESENT VALUE
1 Formula PV

Question

How much should be invested at 6% p.a. so that after 4 years the amount will be ₹2500 when the interest is
compounded?

1 Annually Compounded
2 Quarterly Compounded
3 Monthly Compounded
4 Continuously Compounded

Annual Quarter Monthly

Number of Years 4 4 4
Future
No. Value
of Compounding per 2500 2500 2500
Year 1 4 12
Rate of Interest Per Period 6.00% 1.50% 0.50%
Using Rate Function
Total Periods 4 16 48
Present Value ₹ 1,980.23 ₹ 1,970.08 ₹ 1,967.75

Question
Rate of Interest 6%
Number of Years 4
Installment Per Year -1000 (Cash outflow) Rate Function
Find present value, and future value. 6%

Present Value ₹ 3,465.11 Err:523

Future Value ₹ 4,374.62

Effective and Nominal Interest Rate

 Effective and Nominal Interest Rate

₹100 at 10% invested semi-annually, at the end of 1 year, gives greater interest than 10%
Effective rate is not the same as nominal rate.
10% is called the nominal rate. Effective rate is greater when no. of periods >1.

Sum 100
Interest 10%
Periods 2

The Effective Rate 10.25% Formula: EFFECT

Can we find the nominal interest from effective interest rate?

Nominal Rate 10% Formula: NOMINAL

Rate Function

Loan Amortization Schedule

Amount Borrowed 500000

Number of Years 2
Basis Monthly
Periods 24
Rate of Interest 15%
Periodic Rate of Interest 1.25%
Payment ₹ 24,243.32 This is the amount of periodic payments

Opening
Months PMT Interest Principal Ending Balance
Balance
1 500000 24243 6250 17993 482007
2 482007 24243 6025 18218 463788
3 463788 24243 5797 18446 445342
4 445342 24243 5567 18677 426666
5 426666 24243 5333 18910 407756
6 407756 24243 5097 19146 388610
7 388610 24243 4858 19386 369224
8 369224 24243 4615 19628 349596
9 349596 24243 4370 19873 329722
 10 329722 24243 4122 20122 309601
11 309601 24243 3870 20373 289227
12 289227 24243 3615 20628 268599
13 268599 24243 3357 20886 247714
14 247714 24243 3096 21147 226567
15 226567 24243 2832 21411 205155
16 205155 24243 2564 21679 183476
17 183476 24243 2293 21950 161527
18 161527 24243 2019 22224 139302
19 139302 24243 1741 22502 116800
20 116800 24243 1460 22783 94017
21 94017 24243 1175 23068 70949
22 70949 24243 887 23356 47592
23 47592 24243 595 23648 23944
24 23944 24243 299 23944 0

For Continuous Assesment

1 Create the schedule, if the loan was to be paid in 5 years and in semi-annual basis.

Sinking Funds

Suppose a machine costing ₹50000 is to be replaced at the end of 10 years, at which time it will
have a salvage value of ₹ 5,000. In order to provide money at that time for a machine costing the
same amount, a sinking fund is set-up. The amount of fund at that time is to be difference
between the replacement cost and salvage value. If equal payments are placed in the fund at
the end of each quarter, and the fund earns 8% compounded quarterly, what should each
payment be?

Amount Needed 45000

Rate of Interest 8% pa
Years 10
Number of Periods 40
Payments ₹ 745.01

Period Initial Amount PMT Interest Final Amount

1 ₹ 0.00 ₹ 745.01 ₹ 0.00 ₹ 745.01
2 ₹ 745.01 ₹ 745.01 ₹ 14.90 ₹ 1,504.92
3 ₹ 1,504.92 ₹ 745.01 ₹ 30.10 ₹ 2,280.02
4 ₹ 2,280.02 ₹ 745.01 ₹ 45.60 ₹ 3,070.63
5 ₹ 3,070.63 ₹ 745.01 ₹ 61.41 ₹ 3,877.05
6 ₹ 3,877.05 ₹ 745.01 ₹ 77.54 ₹ 4,699.60
7 ₹ 4,699.60 ₹ 745.01 ₹ 93.99 ₹ 5,538.61
8 ₹ 5,538.61 ₹ 745.01 ₹ 110.77 ₹ 6,394.39
9 ₹ 6,394.39 ₹ 745.01 ₹ 127.89 ₹ 7,267.28
10 ₹ 7,267.28 ₹ 745.01 ₹ 145.35 ₹ 8,157.64
 11 ₹ 8,157.64 ₹ 745.01 ₹ 163.15 ₹ 9,065.80
12 ₹ 9,065.80 ₹ 745.01 ₹ 181.32 ₹ 9,992.12
13 ₹ 9,992.12 ₹ 745.01 ₹ 199.84 ₹ 10,936.97
14 ₹ 10,936.97 ₹ 745.01 ₹ 218.74 ₹ 11,900.72
15 ₹ 11,900.72 ₹ 745.01 ₹ 238.01 ₹ 12,883.75
16 ₹ 12,883.75 ₹ 745.01 ₹ 257.67 ₹ 13,886.43
17 ₹ 13,886.43 ₹ 745.01 ₹ 277.73 ₹ 14,909.17
18 ₹ 14,909.17 ₹ 745.01 ₹ 298.18 ₹ 15,952.36
19 ₹ 15,952.36 ₹ 745.01 ₹ 319.05 ₹ 17,016.41
20 ₹ 17,016.41 ₹ 745.01 ₹ 340.33 ₹ 18,101.75
21 ₹ 18,101.75 ₹ 745.01 ₹ 362.04 ₹ 19,208.79
22 ₹ 19,208.79 ₹ 745.01 ₹ 384.18 ₹ 20,337.98
23 ₹ 20,337.98 ₹ 745.01 ₹ 406.76 ₹ 21,489.75
24 ₹ 21,489.75 ₹ 745.01 ₹ 429.79 ₹ 22,664.55
25 ₹ 22,664.55 ₹ 745.01 ₹ 453.29 ₹ 23,862.85
26 ₹ 23,862.85 ₹ 745.01 ₹ 477.26 ₹ 25,085.12
27 ₹ 25,085.12 ₹ 745.01 ₹ 501.70 ₹ 26,331.83
28 ₹ 26,331.83 ₹ 745.01 ₹ 526.64 ₹ 27,603.47
29 ₹ 27,603.47 ₹ 745.01 ₹ 552.07 ₹ 28,900.55
30 ₹ 28,900.55 ₹ 745.01 ₹ 578.01 ₹ 30,223.57
31 ₹ 30,223.57 ₹ 745.01 ₹ 604.47 ₹ 31,573.05
32 ₹ 31,573.05 ₹ 745.01 ₹ 631.46 ₹ 32,949.52
33 ₹ 32,949.52 ₹ 745.01 ₹ 658.99 ₹ 34,353.52
34 ₹ 34,353.52 ₹ 745.01 ₹ 687.07 ₹ 35,785.60
35 ₹ 35,785.60 ₹ 745.01 ₹ 715.71 ₹ 37,246.32
36 ₹ 37,246.32 ₹ 745.01 ₹ 744.93 ₹ 38,736.25
37 ₹ 38,736.25 ₹ 745.01 ₹ 774.73 ₹ 40,255.99
38 ₹ 40,255.99 ₹ 745.01 ₹ 805.12 ₹ 41,806.12
39 ₹ 41,806.12 ₹ 745.01 ₹ 836.12 ₹ 43,387.25
40 ₹ 43,387.25 ₹ 745.01 ₹ 867.74 ₹ 45,000.00

For Continuous Assesment

1 Create the schedule, if the amount set aside for the new machine is ₹1,00,000, the
interest rate is 10% compounded semi-annually.
0 when the interest is

Continuous
4
2500

2.7183

1966.569653

Rate Function
6%
 ₹ -6,250.00 IPMT Function
₹ -17,993.32 PPMT Function

riodic payments