Class notes
Unit 4 Time Value of Money part 3.pptx
- Course
- Accounting 200 (CFM22A2)
- Institution
- University Of Johannesburg (UJ)
UNIT 4 : Time value of Money – Amortization Part E
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i o n Par tEat
oney– Amortis
alu eo f M
: Tim e v
UNI T 4
, AMORTISATION
• Payment of a loan by means of equal periodic payments over a contracted
period of time.
• The lender receives his interest income and principal repayments over the
contracted period.
• Total Repayment = Interest portion + Capital portion
• Amortisation tables: show the Total Installment and the installment
towards Interest and towards the Capital repayment
• Amortisation table: presented in months, quarters, semi-annually or
annually.
• The repayment can be calculated using the TVM variables by
solving for PMT. Example 4.29 (p.122 / p.139)
, AMORTISATION SCHEDULE (Example 4.30, p.123 / p.140 Textbook)
End of year Instalment Principal Annual Cumulative Principal
payment payment interest interest amount
owing at
year end
0 22 000.00
1 5 350.97 2 710.97 2 640.00 2 640.00 19 289.03
2 5 350.97 3 036.28 2 314.68 4 954.68 16 252.75
3 5 350.97 3 400.64 1 950.33 6 905.01 12 852.12
4 5 350.97 3 808.71 1 542.25 8 447.27 9 043.41
5 5 350.97 4 265.76 1 085.21 9 532.48 4 777.65
6 5 350.97 4 777.65 573.32 10 105.79 0
32 105.82 22 000.01 10 105.79
UNIT 4 : Time value of money
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