Q:

How do you calculate a commercial loan amortization schedule?

A:

Quick Answer

To calculate a commercial loan amortization schedule, draw a four-column table, and label them payment amount, interest paid, principal paid and remaining loan balance, notes the Houston Chronicle. Calculate and insert the appropriate amounts in the respective columns.

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Full Answer

A business may take a loan and pay it off over a specified term in equal amounts or installments, according to the Houston Chronicle. The amortization schedule shows the payment breakdown, which includes the principal and interest to be paid. Decide the total number of installments, the term you are to pay back the loan and the interest rate, according to SF Gate. If you don't have the beginning amount to be paid, use the standard formula to calculate it.

To get the interest rate, multiply the original loan amount by the specified interest rate, notes the Houston Chronicle. If the beginning balance is $100 and the interest rate is 10 percent, then the interest to be paid is in the first year is $10. Subtract the interest from the payment value to get the principal. If the amount to be paid per year in the above example is $15, then the principal equals $15 minus $10 to get $5, which is the principal.

To get the first remaining balance, subtract the principal from the original loan amount, notes the Houston Chronicle. For example, $100 minus $5 equals $95, which is the remaining balance and also the opening balance for the succeeding period. Repeat the process until the remaining balance drops to zero.

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