Amortization Schedule using BA II Plus

Amortization Schedule using BA II Plus

In this tutorial we will be constructing
an amortization schedule using the BA II calculator. An
amortisation schedule is a table that displays how a loan is
repaid. It shows the payment number, the periodic
payment amount, the interest included in each payment, the
amount of principal repaid when a payment is made and the
outstanding principal balance. Let us look at an example.A loan 20,000 is
to be repaid a four-year end payments. If interest is 8 percent
compounded quarterly calculate the size of the yearly payments,
constructed amortization schedule. We begin by stating our P/Y and C/Y. Payments are made annually so we
will set payments per year to 1 and we will set
compounding frequency to 4 since interest is compounded
quarterly. So we start by pressing 2nd P/Y so P/Y 1 ENTER, scroll down and then we set C/Y to 4 4 ENTER, 2ND QUIT. There are 4 yearly
payments so N is going to be 4 (we press 4, N), interest rate is eight-percent, press 8 I/Y, present value is 20,000 so we do 20,000 Present value and then payment is what we want to compute,
we skip that for now, and set future value to 0 0 FV and then compute PMT.

So
the yearly payment should be six thousand and 71 point 14. Now let's construct the
amortization schedule. To construct the amortization schedule
which is partially completed below will first need to re-input the
payment to two decimal places That is, 6 0 7 6 0 7 1 . 1 4 It came out negative so we make that
negative and enter it as payment. Next, to complete the
amortization schedule we simply press 2ND AMORT for the
first payment period we set P1 to 1 ENTER and then we set P2 also to 1 ENTER, so scroll down here get the balance for the first period, the
principal repaid in the first payment period, the interest included in
that first payment so we continue, we scroll down and set P1 to 2 ENTER we scroll down, P2 is also set to 2 ENTER and then we use the balance ere to populate the balance cell for period 2, the principal repaid in period
2 and the interest.

Analyst

So we do the same
thing for period 3 enter 3 for P1 and then enter 3 for P2 as well. So we scroll down and then get the balance, the
principal repaid, and the interest. And finally we do the
same thing for period 4. 4 ENTER, scroll down 4 ENTER, scroll down. The balance is 0 which means the loan
has been paid off and the principal repaid in that final
payment, the interest in that final payment. Notice that P1 represents the starting period and P2 represents the ending period. Next we
just calculate the totals and we're done with
this example.

Thank you!.

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