AMORTIZATION SCHEDULE OR TABLE WITH EXAMPLE

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