Example of Loan Amortization

Basic Finance: A loan of $50,000 is given with a term of 30 years at 8% interest. The monthly payment is $366.88. For the first three payments, (a) calculate the balance on the principal after each payment, and (b) split the payment into the amounts paid on the principal and interest.

[roverandmorerestore]

I’m here for the heavy metal bar he’s waving around

[AlwayzMeFerniii]

damn...straight to the fucking point, no hello, no how are you...lmfao he said LETS GET THIS FUCKING DEGREE!!!

[liguistaforever]

Ohh okay, now that method was way more reliable and understandable. Thanks for the help

[MathDoctorBob]

I don't have a proper financial math playlist; this was a request. I'm actually teaching this now, so I might have more of these in the future.

[bobbymobay]

of $1000. is 80. 80 divided by 12 monthly payments is $6.67 charge per month. Where do you get the $7.34? Are you calculating other factors? I am kinda new at this.

[MathDoctorBob]

A timeline helps here. The key to these is to think in terms of the compounding periods. Quarterly means four periods a year, and we will break the annual interest rate into 4 equal parts. So i=1.5% or .06/4 = .015. Also we have 5 periods (15 mo = 1 yr + 3 mo = 4 + 1 periods). Your factor then becomes

a = [(1-(1.015)^-5)/.015] (this is more standard; you see tables of these in real estate or loan offices)

You would use 15/12 if compounding were annual (in theory).

[msshutupyourmouth]

When I figure 50, 000(1+.006) - 366.88 = $49, 933.12 your amount is $49, 966.45

What is the reason for the difference of my calculations and yours?

[mikebejjani]

Great video, I just have a question on how we calculate the monthly payment, do you have a link to the table where we get the $7.34? or how we calculate that number?

[liguistaforever]

okay thank you, can you just explain one quick thing thou. If a cash amount is compounded quarterly, does it mean that i would input [ (.06/.25)]; and then since it would go for 15 months, does it meant that i would input [(.06/.25)^(15/12)]? I am right, or do i have the period inputs wrong? Thanks in advance for any help.

[dennissameon]

Sir Bob, how did you get the 7.34? What is the formula/computation?

[fmercury]

Professor,
For me the issue is how to set up the equations to reach the results. for example I called my payment "x", I assume a made up loan amt, say 1000 and i=.1 but even with that it gets really messy really fast. Any advise would be greatly appreciated.

[MathDoctorBob]

If you only knew one math fact, this should be it.

[DPIII]

when you look starte on you almost look like Channing Tatum lol 😁😊😍😎!!!

[liguistaforever]

I have to use this formula: P=V [ i/(1-(1+i)^-n)]
The type of questions that require this one are those that ask you how long it would take to get to a certain $ amount if you current Investment/Deposit/Account is any cash amount compounded by a certain % by any period

[conceptualarts]

I come up .245*30 =7.35 or if you were saying 3 payments as quarterly at 8% I still don't come with your math

[Jduplantier]

Thank you so much. This had no link to the question I was trying to solve but it was a great help. P.S. please ignore the name on my user.. Google will not let me change it. ..again. :/

[theamazingjessefan]

type on youtube search : islamic banking Ethica
the first video is something