Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 119
THE EQUAL PRINCIPAL REPAYMENT APPROACH
ОглавлениеSometimes a loan may be structured in such a way that the principal is repaid in equal installments. Thus, the principal component of each installment will remain constant; however, as in the case of the amortized loan, the interest component of each payment will steadily decline, on account of the diminishing loan balance. Therefore, the total magnitude of each payment will also decline.
We will illustrate the payment stream for an eight-year loan of $25,000, assuming that the interest rate is 8% per annum (Table 2.8).
TABLE 2.8 Equal Principal Repayment Schedule
| Year | Payment | Interest | Principal Repayment | Outstanding Principal |
|---|---|---|---|---|
| 0 | 25,000 | |||
| 1 | 5,125 | 2,000 | 3,125 | 21,875 |
| 2 | 4,875 | 1,750 | 3.125 | 18,750 |
| 3 | 4,625 | 1,500 | 3,125 | 15,625 |
| 4 | 4,375 | 1,250 | 3,125 | 12,500 |
| 5 | 4,125 | 1,000 | 3,125 | 9,375 |
| 6 | 3,875 | 750 | 3,125 | 6,250 |
| 7 | 3,625 | 500 | 3,125 | 3,125 |
| 8 | 3,375 | 250 | 3,125 | 0.00 |
