AMORTIZATION SCHEDULE OR TABLE WITH EXAMPLE
DEFINATION:
A table which provide the information about the repayment of principal amount and the interest amount.Example:
Mr. A borrow 20000 from a bank on 10% interest rate for 4 yeard calculate the equal instalment which is payable at the end of each year and also draw the amortization table.
Note:
step 1: R calculate first
step 2: present value fomula of annuity always.
PV = 20000 n=4 i=10% R=?
PVA = R X PVIFAi,n
20000= R x 3.170
R= 20000/3.170
R = 6309
AMORTIZATION TABLE
No. of years
|
Equal installment
|
Interest rate
|
Principal Amount
|
Balance
|
0
|
-
|
-
|
-
|
20000
|
1
|
6309
|
(20000*10/100)=
2000
|
(6309-2000)=
4309
|
(20000-4309)=
15691
|
2
|
6309
|
(15691*10%)=
1569
|
(6309-1569)=
4740
|
(15691-4740)=
10951
|
3
|
6309
|
1095
|
5214
|
5737
|
4
|
6309
|
574
|
5736
|
0 nill
|
INTEREST RATE = BALANCE*INTEREST RATE
PRINCIPAL AMOUNT = EQUAL INSTALLMENT - INTEREST RATE
BALANCE = LAST BALANCE (Y) - CURRENT PRINCIPAL AMOUNT
FINANCIAL MANAGEMENT
DECISION AREA OF FINANCIAL MANAGEMENT
AGENCY PROBLEM
TYPES OF BUSINESS
FINANCIAL SYSTEM
FINANCIAL INTERMEDIARIES
TYPES OF FINANCIAL MARKETS
TIME VALUE OF MONEY
EXAMPLES AND FORMULA TIME VALUE OF MONEY
CASH FLOW,SUM,SERIES OF CASH, ANNUITY AND MIX STREAM
ANNUITY TYPES AND FORMULA
AMORTIZATION SCHEDULE OR TABLE WITH EXAMPLE
EFFECTIVE INTEREST RATE WITH EXAMPLE
VALUATION OF LONG TERM SECURITIES (BONDS)
TYPES OF BONDS
BONDS FORMULA,ZERO COUPON PERPETUAL
VALUATION OF LONG TERM SECURITIES (SHARE)
CASH AND MARKETABLE SECURITIES MANAGEMENT
MANAGING CASH INFLOW AND OUTFLOW
SECURITIES MANAGEMENT
SHORT TERM FINANCING
SPONTANEOUS LABILITIES
NEGOTIATED FINANCE
CAPITAL BUDGETING
CAPITAL BUDGETING TECHNIQUE
NET PRESENT VALUE TECHNIQUE
INTERNAL RATE OF RETURN TECHNIQUE
ACCOUNT RECEIVABLE MANAGEMENT
INVENTORY MANAGEMENT
FORCASTING
MBA NOTES FINANCIAL MANAGEMENT
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