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The table
below shows the
monthly payments per
$1,000 of loan for
interest rates from
5% to 14% for
periods ranging from
5 to 35 years. When
you use an
amortization table,
notice that there
are five variables:
(1) frequency of
payment, (2)
interest rate, (3)
maturity, (4) amount
of the loan, and (5)
amount of the
periodic payment. If
you know any four of
these, you can
obtain the fifth
variable from the
tables. For example,
suppose that you
want to know the
monthly payment
necessary to
amortize a $60,000
loan over 30 years
at 10½% interest.
The first step is to
locate the 10½%
line. Then locate
the 30 year column.
Where they cross,
you will find the
necessary monthly
payment per $1,000:
$9.15. Next multiply
$9.15 by 60 to get
the monthly payment
for a $60,000 loan:
$549. If the loan is
to $67,500, then
multiply $9.15 by
76.5 to get the
monthly payment:
$617.63.
Suppose the
interest rate is
12%, the maturity is
35 years, and the
amount of the loan
is $100,000. The
table below shows
the monthly payment
per $1,000 to be
$10.16. Multiply
this by 100 for a
$100,000 loan and
you get $1,016 as
the monthly payment.
At 13% interest this
loan would cost
$1,096 per month and
at 14% it would cost
$1,176 per
month.
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