SH1663

Name: Ma. Keena Dolindo Section: ABM203

Date: 11/25/21 Score:

Star Studios
Loan Amortization

Directions: Compute for the loan amortization given the following data:

Star Studios wants to buy new audio interfaces because their business is expanding. One audio
interface is P10,000 and they aim to buy five (5) audio interfaces. Their purchasing department
found a supplier who will sell them the interfaces at this price, provided that they will pay it
monthly within five (5) years at 7% interest. Compute for the following: (20 points)

a. Time period: (5 points)

Formula: n = tm
n=?
t = 12
m = 5 years
Solution:
n = tm
n = (12)(5)
n = 60

b. Interest per period: (5 points)

Formula: I = PRT
I=?
P = P10,000
R = 0.07 or 7%
T = 5 years
Solution:
I = PRT
I = (10,000)(0.07)(5)
I = 3,500

c. Monthly payment: (10 points)

𝑖 𝑋 𝑃 ( 1+𝑖)𝑛 3,500 𝑋 10,000 (3,501)60
Formula: 𝐴 = 𝐴=
(1+𝑖 )𝑛 −1 (3,501 )60 − 1
A=? 3,500 𝑋 10,000 (4.48256552)
i = 3,500 𝐴=
4.48256552 − 1
P = P10,000 3,500 𝑋 10,000 (4.48256552)
n= 60 𝐴=
3.48256552
Solution: (35,000,000)(4.48256552)
𝑖 𝑋 𝑃 ( 1 + 𝑖)𝑛 𝐴=
𝐴= 3.48256552
(1 + 𝑖 )𝑛 − 1 156,889,793.2
𝐴=
3,500 𝑋 10,000 ( 1 + 3,500)60 3.48256552
𝐴= 𝐴 = 45, 050, 062.17
(1 + 3,500 )60 − 1

Use the following rubric:

 CRITERIA 5 points 10 points
Complete solution with correct answer 5 10
Incomplete solution, correct answer 3 7
No solution, correct answer 1 3

10 Quiz 1 *Property of STI

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