Equal Principal Payment Method?

Nikki111

New member
Joined
Mar 16, 2007
Messages
23
Ok i found an example online and the principal through out the term never changed is this right? This is my problem ( all these where blank on a table and i had to fill them in.) I dont know how to do the 6th period because your going over the amount of the begninng balance?

Assume you take out a simple interest on the unpaid balance loan to buy some new equipment. The loan amount is $15,000 for three-years, 10% interest loan with semi-annual payments made.

Period BeginningBalance Principal Interest TotalPayment EndingBalance
1 15,000.00 $2,500 1,500.00 4,000 11,000.00
2 11,000.00 2,500 1,100.00 3,600 7,400.00
3 7,400.00 2,500 740.00 3240 4,160.00
4 4,160.00 2,500 416.00 2,916.00 3,332.00
5 3,332.00 2,500 333.20 2833.20 498.80
6 498.80 2,500
 

Denis

Senior Member
Joined
Feb 17, 2004
Messages
1,689
"Equal principal" payments mean the same amount is applied to principal
at each payment; AND the payment reduces gradually, as the interest does:

Code:
   opening princ.payt ending int.payt total payt
1: 15000     -2500     12500    750      3250
2: 12500     -2500     10000    625      3125
and so on...
All that's needed for calculation of the equal principal portion of payment
is amount divided by number of payments, hence: 15000 / 6 = 2500.

You need to use 5% to calculate the interest amount: SEMI-ANNUAL;
the 10% is an annual rate.

Let us know if not clear...
 

Nikki111

New member
Joined
Mar 16, 2007
Messages
23
Denis,
Your such a great help
I didn't realize that i cut the % in half since it was semi-annual makes sense now
Thanks Again
Nikki
 
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