Discussion:

The amount of the periodic payment on a loan equals the compound interest factor (from the "amount to amortize $1 column) times the amount of the loan.

Mortgage Problem #1:

What is the monthly payment on a $100,000 loan for 15 years at 8% interest.

Solution:

1. | Using the 8% monthly table, locate the appropriate factor (the mortgage constant). This is usually column 6 and is labeled "Amount to Amortize $1", "Partial Payment", or "Mortgage Constant". |

2. | Multiply the factor by the loan amount. |

3. | Payment = Mortgage Constant x Loan Amount. |

Factor = 0.00955652

Payment = 0.00955652 x $100,000 = $955.65

Next Mortgage Problem (Loan Balance)

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