Name: Jeanette R.

Ando Course and Year: 03BSA-1

ACTIVITY 1
Assume that you have saved money for a down payment on
your dream house, but you still need to borrow Php500,000 from
your bank to complete the deal. The bank offers you a 5-year
mortgage at an annual rate of 6%.

a. Compute for the Monthly payment.

( ) -1
n

( )
P 1+
r n
mn
= R 1+
r
m
( )
P 1+
r
m
=R
r
m

Principal (P) = Php 500,000

Interest Rate (r) = 6%
No. of months in a year (m) = 12
Total number of Payments (n) = 60

( )
60
500,000 1+( 12 60 )
0.08 180
= R 1+
0.06
12 -1
(
500,000 1+
0.06
12 ) =R
0.06
12
 0.06
1st: 12 = 0.005
2nd: (1.005)60 = 1.348850
3rd: 500,000 (1.348850) = 674,425
4th: 1.348850
5th: 1.348850 - 1= 0.348850
6th: 0.005

674,425=R ( )
0.348850
0.005

674,425=R (69.77)
674,425
R= 69.77

R= Php 9,666.40

b. Construct an Amortization Schedule. (6 months payment

only)
AMORTIZATION SCHEDULE
MONTH MONTHLY INTEREST PRINCIPAL LOAN
PAYMENT BALANCE
500,000.00
1 9,666.40 2,500 7,166.40 492,833.60
2 9,666.40 2,464.17 7,202.23 485,631.37
3 9,666.40 2,428.16 7,238.24 478,393.12
4 9,666.40 2,391.97 7,274.43 471,118.69
5 9,666.40 2,355.59 7,310.81 463,807.88
6 9,666.40 2,319.04 7,347.36 456,460.52

SOLUTION:
 AMORTIZATION SCHEDULE
MONTH MONTHLY INTEREST PRINCIPAL LOAN
PAYMENT BALANCE
1 9,666.40 500,000x0.08/12= 9,666.40-2,500 500,000-
2,500 = 7,166.40 7,166.40
=492,833.60
2 9,666.40 492,833.60x0.08/12 9,666.40- 492,833.60-
=2,464.17 2,464.17 7,202.23
=7,202.23 =485,631.37
3 9,666.40 485,631.37x0.08/12 9,666.40- 485,631.37-
= 2,428.16 2,428.16 7,238.24
=7,238.24 =478,393.12
4 9,666.40 478,393.12x0.08/12 9,666.40- 478,393.12-
=2,391.97 2,391.17 7,274.43
=7,274.43 =471,118.69
5 9,666.40 471,118.69x0.08/12 9,666.40- 471,118.69-
=2,355.59 2,355.59 7,310.81
=7,310.81 =463,807.88
6 9,666.40 463,807.88x0.08/12 9,666.40- 463,807.88-
=2,319.04 2,319.04 7,347.36
=7,347.36 =456,460.52

ACTIVITY 2
 Ritchel Jay is about to purchase a brand new Toyota Vios
1.3 E Prime A/T 2022 for Php 900,000. The car dealer referred
Ritchel to FinBank to complete the deal. Finbank offered him a
five (5) year car loan at 18% per annum with 2% of the purchase
price as processing fee.

a. Compute for Ritchel’s Monthly Amortization.

( ) -1
n

( )
n
r r
P 1+
mn
= R 1+
m
( )
P 1+
r
m
=R
r
m

Principal (P) = Php 900,000

Interest Rate (r) = 18%
No. of months in a year (m) = 12
Total number of Payments (n) = 60

( )
60
500,000 1+ (
0.08 180
12 60
= )
R 1+
0.18
12 -1
(
900,000 1+
0.18
12 )
=R
0.18
12

0.18
1st: 12 = 0.015
2nd: (1.015)60 = 2.443220
3rd: 900,000 (2.443220) = 2,198,898
4th: 2.443220
5th: 2.443220 - 1= 1.443220
6th: 0.015

2,198,898=R ( )
1.443220
0.015

2,198,898=R (96.214667)
2,198,898
R= 96.214667

R= Php 22,854.08

b. Prepare the Amortization Schedule. 1-year schedule only.

AMORTIZATION SCHEDULE
MONTH MONTHLY INTEREST PRINCIPAL LOAN
PAYMENT BALANCE
900,000.00
1 22,854.08 13,500.00 9,354.08 890,645.92
2 22,854.08 13,359.69 9,494.39 881,151.53
3 22,854.08 13,217.27 9,636.81 871,514.72
4 22,854.08 13,072.72 9,781.36 861,733.36
5 22,854.08 12,926.00 9,928.08 851,805.28
6 22,854.08 12,777.08 10,077.00 841,728.28
7 22,854.08 12,625.92 10,228.16 831,500.13
8 22,854.08 12,472.50 10,381.58 821,118.55
9 22,854.08 12,316.78 10,537.30 810,581.25
10 22,854.08 12,158.72 10,695.36 799,885.89
11 22,854.08 11,998.29 10,855.79 789,030.09
 12 22,854.08 11,835.45 11,018.63 778,011.46

c. Compute the Total Interest that Ritchel Jay will have to pay
over the lifetime of the loan.
Total Interest – Principal= Total Interest
1,371,244.80 - 900,000= 471,244.80

d. How much is the Loan Balance after Ritchel paid the 3rd
monthly amortization?
871,514.72

e. What is the Annual Percentage Rate (APR)?

APR= 20%

f. Assuming that, Ritchel is currently working at Global Finance,

Inc. as Finance Controller with a Gross Monthly Salary of Php
50,000 for the Month of March 2022. Compute for Ritchel’s
Debt to-Income (DTI) Ratio.
Recurring Monthly Debt
Debt to Income Ratio= Gross Monthly Income
22,854.08
= 50,000

Debt to Income Ratio= 0.46 or 46%