Time Value of Money - Amortized Loans
4 important questions on Time Value of Money - Amortized Loans
What amortized loans?
A loan that is to be repaid in equal amounts on a monthly, quarterly, or annual basis.
What are examples of amortized loans?
What is amortization schedule?
It gives the required payment on each payment date and a breakdown of the payment, showing how much is interest and how much is repayment of principal.
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What are the steps to setting up a amortization schedule? (4)
2. Find the interest paid in year 1
3. Find the principal repaid in year 1
PRIN = PMT - INT
4. Find the ending balance after year 1
END BAL = BEG BAL - PRIN
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