1. Construct the amortization schedule for a $20000 debt that is to be amortized in 8 equal quarterly payments at an annual rate of 12 % compounded quarterly on the unpaid balance.

First, determine the size of the payments, PMT = _________?

|Payment # |size of payment |interest paid |balance paid |unpaid balance |

| | | j = 0.03 | |$20000.00 |

|1 | |$600.00 | | |

|2 | | | | |

|3 | | | | |

|4 | | | | |

|5 | | | | |

|6 | | | | |

|7 | | | | |

|8 | | | |$0.00 |

How much total interest will be paid over the 8 quarters ?

2. Consider a $100,000 debt that is to be amortized in 360 equal monthly payments (i.e., 30-year mortgage) at a nominal rate of 6 % compounded monthly on the unpaid balance. First, determine the size of the payments, PMT = _________?

Construct the first few rows of an amortization schedule

|Payment # |size of payment |interest paid