BUSANA1 Practice Exercise 3 Part 2

AMORTIZATION
1. A loan of P110,000 with interest at 15.84% compounded monthly is to be amortized by 36
monthly installments. How much is the monthly installment?
2. Avelina’s resto gets a loan of P500,000 for the construction of a new branch in Bulacan. She will
repay the loan by quarterly payments for 6 ½ years. How much is the quarterly payment if
interest is charged at 18%, m = 4?
3. A loan is being amortized by payments of P12,500 at the end of each 6 months for 4 years. If
interest is charged at 16% compounded semiannually, find the size of the loan.
4. A P25,000 debt is to be amortized in 12 payments every quarter. Find the quarterly payment
and the outstanding balance just after the 8th payment using prospective method if money is
worth 13% converted quarterly.
5. Find the outstanding balance just after the 8th payment in problem 4 using retrospective method.
6. A P75,000 loan is amortized annually at P8000 each. Find the remaining liability just after 6
years if interest is 8% effective.
7. A loan is amortized semiannually at P9000 each. If outstanding principal just after 10th payment
is P50,000, find the original loan if money is worth 9% compounded semiannually?
8. A loan is to be amortized by quarterly payments of P4,800 each with interest at 16%, m = 4.
If the outstanding principal at the end of 6 years is P80,900.50, find the size of the loan.
9. Riza obtained a P450,000 loan from the bank. She decided to repay the loan over 10 years.
If the bank charges interest at 18% compounded quarterly, find the outstanding liability at
the end of 6 12 years using two methods.

10. The cash price of an equipment is P30,500. It was bought on installment basis of 20% down
payment and the balance is to be paid monthly for one year at 12% compounded monthly.
a. Find the monthly payment.
b. If the buyer wishes to make a lump-sum payment just after the 8th payment, how much
should he pay?
c. What is the total interest paid on the loan?
11. AJ obtained a P500,000 loan at 8% interest payable annually for the production of handicrafts.
He will repay the loan by making payments each year for 18 years.
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a. Find the outstanding principal at the beginning of 6 year.
b. How much was the interest payment at the end of the 6th year?
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c. By how much has the principal been reduced in the 10 payment?
d. What was the total interest paid on the loan?
12. In buying a washing machine worth P 12,000, Aling Nena pays P2000 cash and agrees to pay the
balance through monthly installments for one year. Interest is charged at 12%, m = 12.
a. Find the monthly payment.
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b. If Aling Nena wants to terminate the debt after the 8 payment, how much should she
pay?
13. Annette borrows P100,000 and agrees to repay it by yearly payments for 12 years. The lender
charges interest at 8.5% effective.
a. What is the annual payment?
b. What is the outstanding balance just after the 10th payment?
c. How much of the 8th payment goes to pay the interest? goes to repay the principal?
14. Construct the amortization schedule for a loan to be repaid at P15000 semiannually at 18%,
m = 2 for 2 years.

15. Construct the amortization schedule for a P60,000 loan to be repaid by quarterly payments for
1.5 years if interest is at 12%, m = 4.
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16. Annie agreed to pay P20,000 quarterly for as long as necessary for a loan of P300,000 acquired
on May 13, 2014. Interest is charged at 14% compounded quarterly.
a. How many regular payments of P20,000 are needed to terminate the loan? 21 payments
b. When is the final irregular payment due?
c. How much is remaining liability just after the last regular payment?
d. How much is the interest payment on the last quarter?
e. How much is the final irregular payment?
f. How much is the total interest paid is discharging the loan?

17. The cash price of a car is P980,000 and the buyer made a 20% down payment and agreed to
amortize the balance through semiannual payments of P85000 for as long as necessary with
interest charged at 12% compounded semiannually.
a. How many regular payments of P85,000 are needed to terminate the loan? 13 payments
b. How much is outstanding liability just after the 9th payment?
c. How much of the 10th payment goes to interest?
d. How much of the principal was repaid on the 10th payment?
e. How much is the outstanding liability just after the last regular payment?
f. How much is the interest payment on the last period?
g. How much is the final irregular payment? When is it due?
h. How much is the total interest paid on the loan?
i. Construct the amortization schedule for the loan.
18. A loan of P75,000 is to be amortized by quarterly payments of P15,000 for as long as necessary,
with a final irregular payment made 3 months after the last regular payment. Interest is charged
at 16% converted quarterly.
a. How many regular payments of P15,000 are needed?
b. What is the final irregular payment? When is it due?
c. How much is the total interest paid on the loan?
d. Construct the amortization schedule.
19. An appliance worth P50,000 is bought with a down payment of P5,000 and monthly installments
of P3,000 and a final payment. The buyer pays interest at 18% compounded monthly.
a. How much is the outstanding balance just after the 5th installment?
b. How much interest is paid in the 9th installment?
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c. How much principal is repaid in the 12 installment?
d. How much is the final payment? When is it due?

20. A debt of P50,000 bears interest at 10 % compounded semiannually. It is to be repaid by P4,000

at the end of every 6 months for as long as necessary.
a. Find the final irregular payment and when is it due.
b. What part of the 15th payment of P4,000 is interest payment?
c. What part of the 10th payment of P4,000 is repayment of principal?