AMORTIZATION
Learning objective:
The learners are expected to
compute loan amortization using
mathematical concepts.
MORTGAGE
a debt instrument, secured by the
collateral of specified real estate
property, that the borrower is
obliged to pay back with a
predetermined set of payments.
DOWNPAYMENT
• A certain percent of
the purchase price
of the property
• Generally called the
buyer’s equity
Assume that you wish to purchase a secondhand car
worth P312,500 and the seller requires a 20%
downpayment.
Downpayment= Purchase Price x Downpayment %
= P312,500 x 20% = P62,500
Mortgage Loan= Purchase Price – Downpayment
= P312,500 – P62,500 =P250,000
AMORTIZATION
It refers to the installment
payment on the loan.
AMORTIZATION TABLE-
schedule prepared showing
the installment payments for
the period of payment.
Monthly Payment
Annual Percentage Rate (APR)- the yearly interest charge by
the bank
A=
Where: A is the monthly payment i is the monthly
interest rate
P is the loan’s initial amount n is the total
number of payments
APR= 5% (5%/12 months =.0041667) Terms: 30
years (360 months)
Mortgage Loan=P250,000
A=
=
=P1,342.06
Cellphone P30,000
Terms: 6 months
APR: 3%
SOLVE THE PROBLEM
ABOVE
Cellphone P30,000
Terms: 6 months
APR: 3%
A=
=
=P5,043.84
(3%/12 months= .0025)
AMORTIZATION
TABLE:CELLPHONE worth P30,000
PAYMENT AMOUNT PRINCIPAL INTEREST BALANCE
1 P 5,043.84 P 4,968.84 P 75 P 25,031.16
2 5,043.84 4,981.26 62.58 20,049.90
3 5,043.84 4,993.72 50.12 15,056.18
4 5,043.84 5,006.20 37.64 10,049.98
5 5,043.84 5,018.72 25.12 5,031.26
6 5,043.84 5,031.26 12.58 0
P 30,263.04 P30,000 P 263.04
# of Monthly Total Total Interest Total Paid
payments payment Principal Paid
Paid
6 months P5,043.84 P30,000 P263.05 P30,263.05
How, how, how de carabao…
1st month:
1. Interest= List Price x APR = P30,000 x .0025 =P75
2. Principal= Monthly Payment-Interest = P 5,043.84 –P75 = P4,968.84
3. Balance = List Price – Principal = P30,000 –P4,968.84 = P25,031.16
2nd month:
4. Interest = Balance of 1st month x APR = P25,031.16 x .0025 = P62.58
5. Principal= Monthly Payment-Interest = P 5,043.84 –P62.58 = P4,981.26
6. Balance = Balance of 1st month – Principal of the 2nd month = P20,049.90
9:30-10am
INSTRUCTION: Answer the following with
complete solutions.
A brand new house and lot at a well-known
subdivision is priced at P3,500,000 requiring a
down payment of 20%. The financing company
charges an internet of 12% for a term of 2 years.
Prepare manually an amortization schedule for the
full term of the loan.
10:00-12nn
INSTRUCTION: Answer the following with complete solutions.
A brand new house and lot at a well-known subdivision is priced
at P4,500,000 requiring a down payment of 20%. The financing
company charges an internet of 14% for a term of 2 years.
Prepare manually an amortization schedule for the full term of
the loan.
1:30-3:00pm
INSTRUCTION: Answer the following with complete solutions.
A brand new house and lot at a well-known subdivision is priced
at P4,500,000 requiring a down payment of 20%. The financing
company charges an internet of 16% for a term of 2 years.
Prepare manually an amortization schedule for the full term of
the loan.
