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The document outlines several problems related to amortized loans, including calculating payments and comparing loan options. It also addresses early loan payoff strategies and the future value of deposits and lump sums with different compounding frequencies. Each problem provides a structured approach to financial calculations involving loans and investments.

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jakipisa
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3 views

Tasks

The document outlines several problems related to amortized loans, including calculating payments and comparing loan options. It also addresses early loan payoff strategies and the future value of deposits and lump sums with different compounding frequencies. Each problem provides a structured approach to financial calculations involving loans and investments.

Uploaded by

jakipisa
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Amortized

loan
Prepared by
Ryspay Akmaral
Problem 1: An amortized loan is repaid in equal
payments over a specified time period. Let’s
assume that a lender offers you a $30 000, 6
percent interest rate, four-year loan that is to be
fully amortized with four annual payments. The first
payment will be due one year from the loan date,
making the loan an ordinary annuity. How much will
you have to pay each year? Make amortization
schedule.
Problem 2: Comparison of Loan Terms
Task:
You have two loan options:
Loan A: $25,000 at 6% annual interest for 5 years.
Loan B: $25,000 at 5% annual interest for 8 years.
Compare the two loans in terms of monthly payment,
total interest paid, and total amount paid over the life
of the loan.
Steps:
• Calculate the monthly payment for both loans using
the amortization formula.
• Calculate the total amount paid (annual payment ×
number of payments) and the total interest for each
loan.
• Compare the results to determine which loan is
more cost-effective in the long run.
Problem 3: Early Loan Payoff
Task:
You want to pay off your loan 2 years earlier than
scheduled. How much extra will you need to pay
each month to achieve this goal?
Assume the original loan amount is $15,000 at a
6% annual interest rate with a 5-year term.
Steps:
• First, calculate the original monthly payment.
• Determine the remaining balance after 3 years.
• Recalculate the monthly payment to pay off
the loan in 3 years instead of 5.
• Find the extra amount you will need to pay
each month to achieve the earlier payoff.
Problem 4: You plan to deposit $2,800 at
the end of each year for 6 years into an
account earning 5% annually. What will
the value of these deposits be at the end
of 6 years?
Problem 5: Value of a Lump Sum with
semi-annual Compounding
You deposit $2,000 today into an account
that earns 8% interest, compounded
semi-annually. What will the balance be in
4 years?
Problem 6: Value of a Lump Sum with
Compounding Quarterly
You will receive $60,000 in 3 years, and
the annual interest rate is 9%,
compounded quarterly. What is the value
of your receipt?
Thank you for your
active participation!

This is the end of


practice

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