Question

Find the payment necessary to amortize a 6.3% loan of 7500 compounded semiannually, with 6 semiannual payments. Find the payment necessary to amortize the loan and the total payments and the total amount of interest paid based on calculated semiannual payments.

Answer 1

Answer:

Semiannual payment = $ 1391.37

Total payment = $ 8348.22

Interest paid =  $ 848.22

Step-by-step explanation:

Since, the semiannual payment formula of a loan,

$P=\frac{PV(\frac{r}{2})}{1-(1+\frac{r}{2})^{-n}}$

Where,

PV = present value of the loan,

n = number of semiannual payments,

r = annual rate,

Here, PV = 7500, r = 6.3% =0.063, n = 6,

By substituting the value,

The semiannual payment would be,

$P=\frac{7500(\frac{0.063}{2})}{1-(1+\frac{0.063}{2})^{-6}}$

$\approx \ 1391.37$

Also, total payment = semiannual payment × total semiannual periods

= 1391.37 × 6

= $ 8348.22,

Also, the interest paid = total payment - present value

= 8348.22 - 7500

= $ 848.22