A loan for $150,000 for 30 years at 6% compounded semi-annually. What is the monthly payment of this loan and at what payment will the loan be reduced to approximately $75,000, or about half the original principal? Thank you for help.
The first thing you have to do is to convert 6% from compounded semi-annually to compounded monthly. And you can do that as follows:
1.03^(1/6) =1.004938622 - 1 x 100 =0.4938622% - This is the monthly compound rate.
0.4938622 x 12 =5.9263464% - This is the annual rate compounded monthly.
I shall use this amortization schedule to give you all the answers you want:
All the answers to your question are in the above amortization schedule:
Look at the top and you will see the monthly payment = $892.24
Look at the last column of the table where it says "Ending Balance". Go down that column until you see a balance closest to $75,000, and, quickly, you will see that after the 251st payment the balance of the loan will be =$75,064.79, which the closest to $75,000 as you can get.
I hope this answers all your questions. Good luck.