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Loan Amortization

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I need to know step by step how to calculate the following:

Loan Value: $1,594,600
Amortization: 15 Years
Payments : Monthly
Interest Rate: 7%

a) How much is the Payment?
b) How many months?
c) How much of the payment is interest & How much is principle?

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Solution Summary

The solution explains various calculations relating to loan amortization.

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a) The payments are equal and would be such that the present value is equal to the amount of loan. The payments are an annuity and we use the Present Value of Annuity formula to calculate the payments. The formula is
PV = PMT [(1 - (1 / (1 + i)^n)) / i]
Here
PV is the present value which is the loan amount = 1,594,600
PMT is the monthly payment
i = ...

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