Amortization and Deferred Annuity

Question 1

This is the gradual extinction of a loan over a period of time by means of a series of regular payments due at the end of each payment period

Answer 1

Amortization

Question 2

This is a table that shows how the borrower repays the loan with the interest over time by paying regularly. Both the lender and the borrower will be able to see how much of each payment goes to the interest and how much is reduced to the principal.

Answer 2

Amortization Schedule

Question 3

Column 1 of Amortization Schedule

Answer 3

Period (Multiply the number of times you pay in a year)

Question 4

Column 2 of Amortization Schedule

Answer 4

Periodic Payment (PV of Simple Ordinary Annuity)

Question 5

Column 3 of Amortization Schedule

Answer 5

Interest
(Previous Balance rate (r) ) // compounding period (n)

Question 6

Column 4 of Amortization Schedule

Answer 6

Amount Repaid (Periodic Payment-Interest)

Question 7

Column 5 of Amortization Schedule

Answer 7

Outstanding Balance (Previous balance-amount repaid)

Question 8

It is an annuity that delays the start of payments until the agreed upon date.

Answer 8

Deferred Annuity

Question 9

This is the length of time between the release of the loan and the first payment

Answer 9

Period of deferment