Amortize the debt problem

Question

Monthly payments are made on 130000 dollars at 5% for 25 days. Determine the payment needed to amortize the debt.

Do you really mean 25 days? That would be less than one month's worth of payments. — paw88789, Sep 18 '14 at 15:51

score 2 · Accepted Answer · answered Sep 18 '14 at 15:57

2

A useful formula is $P=R\cdot \frac{1-(1+i)^{-n}}{i}$, where $P$ is the size of the loan (principal); $i$ is the interest rate per period (not the annual rate); and $n$ is the number of interest periods over the life of the loan.

answered Sep 18 '14 at 15:57

paw88789

40,402

So here P=130000, I=0.05 and n=25. I have to solve for R? – user108605 Sep 18 '14 at 16:04
It depends how interest is being compounded. Usually compoundings match the payment period; here, monthly. – paw88789 Sep 18 '14 at 16:06

score 1 · Answer 2 · answered Sep 18 '14 at 16:38

1

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Here is a slick way to calculate the amortization schedule for the debt. I have made adjustment of the 25 day rate to monthly rate (actual over 360) and computed interest based on that. Hope this is what you meant.

Thanks

Satish

answered Sep 18 '14 at 16:38

Satish Ramanathan

11,984

Amortize the debt problem

2 Answers2