Time Value of Money - Six Functions of a Dollar
Using Assessors’ Handbook Section 505 (Capitalization Formulas and Tables)
Appraisal Training: Self-Paced Online Learning Session

Lesson 7: Periodic Repayment

Check Your Knowledge

In order to solve the following problems you will need to refer to AH 505 to look up the factors in the compound interest tables. Before you start, please print the problems using the "Print Questions" button below so you can work through the problems on your own. After you work through the problem, the solution can be viewed by clicking on the blue plus sign immediately following the question. Additionally, when you have completed all the problems, you may print all of the solutions using the "Print Questions with Answers" button below.



Problem 1

Calculate the payment amount (PMT) for each loan amount using the Periodic Repayment (PR) factors in AH 505:

Image of a table containing five rows of data to be used to solve for the periodic repayment amounts. In separate columns, each row contains a present value, a number of years, and an annual interest rate. In the first row, the present value is $125,000; the number of years is 10; and the annual interest rate is 5%. Solve for the repayment amount. In the second row, the present value is $300,000 the number of years is 30; and the annual interest rate is 5%. Solve for the monthly repayment amount. In the third row, the present value is $500,000; the number of years is 10; and the annual interest rate is 8%. Solve for the repayment amount. In the fourth row, the present value is $1,000,000; the number of years is 30; and the annual interest rate is 12%. Solve for the repayment amount. In the fifth row, the present value is $75,000; the number of years is 5; and the annual interest rate is 15%. Solve for the repayment amount.

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Problem 2

You take out a car loan for $8,000 at an annual interest rate of 10% with 48 monthly payments due at the end of each month. What is the monthly payment?

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Problem 3

Show the amortization schedule for a loan of $25,000 at an annual rate of 6% that will be repaid in four annual end-of-period installments.

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Problem 4

Joan will deposit $4,000 at the end of each year for 15 years, after which she will withdraw the balance in 20 equal annual installments, beginning at the end of year 16. Assuming an annual interest rate of 12% throughout, how much can she withdraw each year?

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