Repaying a debt with several payments

ThomasPaine1

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I'm stuck on this problem. I've tried using several formulas to solve it but it seems that I always have too many unknown variables. Can someone please help me figure out? Thanks!

The question:
A debt is repaid with an annuity of semi-annual payments of 1,680.39. If the 5th and 15th principal repayments are 1,047.17 and 1,407.30, respectively, how much is the interest portion of the 10th installment?
 
I've tried using several formulas to solve it but it seems that I always have too many unknown variables. Can someone please help me figure out?
Please show us one of your attempts, so that we may assess what you've tried and make suggestions. Perhaps some variable can be expressed in terms of others. Thank you.

 
PMT = A5 + I5
I5 = 1680.39 - 1047.17
I5 = 633.22

D14 = D0(1+i)^14 - PMT(s, n=14, i=?)
D4 = D0(1+i)^4 - PMT(s, n=4, i=?)

1047.17 + D5*i = 1407.30 + D14*i
360.13 + D14*i = D5*i

I don't know how to find the interest rate from here, too many unknown variables.
 
Last edited:
Beer induced opinion and reckoning follows.
The question:
A debt is repaid with an annuity of semi-annual payments of 1,680.39. If the 5th and 15th principal repayments are 1,047.17 and 1,407.30, respectively, how much is the interest portion of the 10th installment?
A simulation with known quantities might be a good idea.
Take the following amortization schedule where you know that [imath]A = 52,000[/imath] is the loan amount, [imath]R = 4,571.63[/imath] is the periodic payment (monthly in this case), and [imath]i[/imath] is the effective monthly rate.
You know from the table what the principal repaid on the 7th & 10th payment are.
Suppose you don't know the loan amount and the monthly rate.
You can set up a system of equations to solve for [imath]A[/imath] and [imath]i[/imath]; once you have a value for [imath]i[/imath], you can then determine the interest portion of any nth payment.
Software is highly recommended for a somewhat complicated system of equations considering that your course (unless I'm mistaken) is just basic finance mathematics. I think I remember seeing TKHunny (or maybe Denis) tackling something similar a few years back but I can't seem to recall how those two did it back then given my recent fever bout that lasted for several days.
The complicated scenario I have in mind for now goes something like
[imath]R-\left[A(1+i)^{10-1}-R\frac{(1+i)^{10-1}-1}{i}\right]*i=4,459.22[/imath]
and
[imath]R-\left[A(1+i)^{7-1}-R\frac{(1+i)^{7-1}-1}{i}\right]*i=4,349.57[/imath]
where [imath]R = 4,571.63[/imath] and you let a software solve for [imath]A[/imath] and [imath]i[/imath].

Adapting this simulation to your problem should be easy.


Screenshot_20211012-201250_Sheets.jpg
 
The solution is easy to get to, I found the formula I needed.

A15 = A5(1+i)^10
You can find i from that equation because it's the only unknown.

You can then apply the same formula:
A15 = A10(1+i)^5
You can solve for A10 since it's the only unknown.

The last step is then to use the formula PMT = A10 + I10 where you can solve for I10 and that will be the answer to the question of the problem.
 
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