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NSWMaths AdvancedQuick questions
Year 12: Financial Mathematics
Quick questions on Reducing-balance loans: repayments, outstanding balance and present value of an annuity
2short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is building the amortisation schedule, row by row?Show answer
The safest way to see the split shift is to build a schedule one row at a time, carrying each closing balance down to be the next opening balance. Take the $25000 car loan at per month () with the $497.39 monthly repayment found below, and build the first three months stage by stage. Each row follows the same three rules: interest is the opening balance times ; principal repaid is payment minus interest; closing balance is opening plus interest minus payment.
What is total interest?Show answer
Total amount paid over the loan is . Since the loan amount is returned, total interest is
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