**Directions:**

Figure out the average monthly payments for two purchases made with loans using the amortization calculation formula.

Alternatives: Do your own amortization calculations using spreadsheet software* or generate an amortization payment chart by using an online financial calculator.

#### Amortization Calculation Formula

** A **= payment amount

** P **(aka

**= principal (the present value of the loan)**

*pv*)** R **= interest rate, per period (decimal number)

** N **= total number of payments over which the loan will be repaid

Description | Present Value of Loan (pv) | Annual Interest Rate (APR) | Interest Rate Per Period (r) | Number of Payments (n) | Payment Amount(A) | Total Amount to be Repaid |

Example- Cash Loan | $100 | 40.0% | 40% / 12 = $3.33% | 6 | $18.66 | $18.66 x 6 = $111.96 |

Big-Screen TV | $700 | 7.0% | 7% / 12 = .58% | 24 | ||

College Loan | $12,000 | 3.5% | 3.5% / 12 = .29% | 180 |

**See Microsoft Excel File, â€śAmortization Calculationâ€ť*