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Calculation of Simple Interest On Reducing Balance

The document shows a calculation of simple interest on a reducing balance over 12 months with an annual interest rate of 9.5% and original balance of $100,000. Each month interest is calculated on the remaining balance and subtracted along with a payment of $8,768.35, reducing the principal balance until it reaches 0 after 12 months.

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Isabeau Jane Salvatore St-Pierre
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118 views12 pages

Calculation of Simple Interest On Reducing Balance

The document shows a calculation of simple interest on a reducing balance over 12 months with an annual interest rate of 9.5% and original balance of $100,000. Each month interest is calculated on the remaining balance and subtracted along with a payment of $8,768.35, reducing the principal balance until it reaches 0 after 12 months.

Uploaded by

Isabeau Jane Salvatore St-Pierre
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Calculation of Simple Interest on Reducing Balance

Annual Interest Rate 9.50%


Years 1
Number of Payment Per Year 12
Original Balance $ 100,000.00

Month Payment Interest Principal Balance


0 $ 100,000.00
1 ($8,768.35) ($791.67) ($7,976.68) $ 92,023.32
2 ($8,768.35) ($728.52) ($8,039.83) $ 83,983.48
3 ($8,768.35) ($664.87) ($8,103.48) $ 75,880.00
4 ($8,768.35) ($600.72) ($8,167.63) $ 67,712.37
5 ($8,768.35) ($536.06) ($8,232.29) $ 59,480.07
6 ($8,768.35) ($470.88) ($8,297.47) $ 51,182.60
7 ($8,768.35) ($405.20) ($8,363.16) $ 42,819.45
8 ($8,768.35) ($338.99) ($8,429.36) $ 34,390.08
9 ($8,768.35) ($272.25) ($8,496.10) $ 25,893.99
10 ($8,768.35) ($204.99) ($8,563.36) $ 17,330.63
11 ($8,768.35) ($137.20) ($8,631.15) $ 8,699.48
12 ($8,768.35) ($68.87) ($8,699.48) 0.00
<< Try Yourself >>

Annual Interest Rate


Years
Number of Payment Per Year
Original Balance

Month Payment
0
1
2
3
4
5
6
7
8
9
10
11
12
<< Try Yourself >>

Annual Interest Rate 9.50%


Years 1
mber of Payment Per Year 12
Original Balance $ 100,000.00

Interest Principal Balance


$ 100,000.00
Application of PMT Function

Annual Interest Rate 9.50%


Years 1
Number of Payment Per Year 12
Original Balance $ 100,000.00

Month Payment Interest Principal Balance


0 $ 100,000.00
1 ($8,768.35)
2 ($8,768.35)
3 ($8,768.35)
4 ($8,768.35)
5 ($8,768.35)
6 ($8,768.35)
7 ($8,768.35)
8 ($8,768.35)
9 ($8,768.35)
10 ($8,768.35)
11 ($8,768.35)
12 ($8,768.35)
<< Try Yourself >

Annual Interest Rate


Years
Number of Payment Per Year
Original Balance

Month Payment
0
1
2
3
4
5
6
7
8
9
10
11
12
<< Try Yourself >>

Annual Interest Rate 9.50%


Years 1
ber of Payment Per Year 12
Original Balance $ 100,000.00

Interest Principal Balance


###
Use of IPMT Function

Annual Interest Rate 9.50%


Years 1
Number of Payment Per Year 12
Original Balance $ 100,000.00

Month Payment Interest Principal Balance


0 $ 100,000.00
1 ($8,768.35) ($791.67)
2 ($8,768.35) ($728.52)
3 ($8,768.35) ($664.87)
4 ($8,768.35) ($600.72)
5 ($8,768.35) ($536.06)
6 ($8,768.35) ($470.88)
7 ($8,768.35) ($405.20)
8 ($8,768.35) ($338.99)
9 ($8,768.35) ($272.25)
10 ($8,768.35) ($204.99)
11 ($8,768.35) ($137.20)
12 ($8,768.35) ($68.87)
#DIV/0!
Application of PPMT Function

Annual Interest Rate 9.50%


Years 1
Number of Payment Per Year 12
Original Balance $ 100,000.00

Month Payment Interest Principal Balance


0 $ 100,000.00
1 ($8,768.35) ($791.67) ($7,976.68)
2 ($8,768.35) ($728.52) ($8,039.83)
3 ($8,768.35) ($664.87) ($8,103.48)
4 ($8,768.35) ($600.72) ($8,167.63)
5 ($8,768.35) ($536.06) ($8,232.29)
6 ($8,768.35) ($470.88) ($8,297.47)
7 ($8,768.35) ($405.20) ($8,363.16)
8 ($8,768.35) ($338.99) ($8,429.36)
9 ($8,768.35) ($272.25) ($8,496.10)
10 ($8,768.35) ($204.99) ($8,563.36)
11 ($8,768.35) ($137.20) ($8,631.15)
12 ($8,768.35) ($68.87) ($8,699.48)
#DIV/0!
Calculation of Simple Interest on Reducing Balance

Annual Interest Rate 9.50%


Years 1
Number of Payment Per Year 12
Original Balance $ 100,000.00

Month Payment Interest Principal Balance


0 $ 100,000.00
1 ($8,768.35) ($791.67) ($7,976.68) $ 92,023.32
2 ($8,768.35) ($728.52) ($8,039.83) $ 83,983.48
3 ($8,768.35) ($664.87) ($8,103.48) $ 75,880.00
4 ($8,768.35) ($600.72) ($8,167.63) $ 67,712.37
5 ($8,768.35) ($536.06) ($8,232.29) $ 59,480.07
6 ($8,768.35) ($470.88) ($8,297.47) $ 51,182.60
7 ($8,768.35) ($405.20) ($8,363.16) $ 42,819.45
8 ($8,768.35) ($338.99) ($8,429.36) $ 34,390.08
9 ($8,768.35) ($272.25) ($8,496.10) $ 25,893.99
10 ($8,768.35) ($204.99) ($8,563.36) $ 17,330.63
11 ($8,768.35) ($137.20) ($8,631.15) $ 8,699.48
12 ($8,768.35) ($68.87) ($8,699.48) 0.00
#DIV/0!

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