Grade 9 Amortization Worksheet
This worksheet helps Grade 9 students understand the basics of loan amortization, including calculating interest, principal payments, and remaining balances.
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Amortization Worksheet
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Read each question carefully and show all your work. Use the provided spaces for your calculations and answers.
Amortization is the process of paying off a loan over time through regular payments. Each payment consists of both principal and interest. Initially, a larger portion of the payment goes towards interest, and over time, a larger portion goes towards the principal.
1. The process of paying off a loan over time through regular payments is called .
2. Each loan payment consists of two parts: and .
3. At the beginning of a loan, a larger portion of the payment goes towards .
1. Explain in your own words what an amortization schedule is and why it is useful.
2. A student takes out a loan of $5,000 at an annual interest rate of 6%. If the first monthly payment is $100, calculate the interest paid in the first month and the principal paid in the first month. (Assume interest is calculated monthly).
1. Which of the following best describes the principal component of a loan payment?
The total amount of money borrowed.
The extra money paid for borrowing the loan.
The portion of the payment that reduces the loan balance.
The fixed monthly payment amount.
2. As a loan is amortized, the amount of interest paid with each subsequent payment typically:
Increases
Decreases
Stays the same
Varies unpredictably
1. The total amount paid on an amortized loan is always equal to the original principal amount.
True
False
2. An amortization schedule shows how much of each payment goes towards principal and how much goes towards interest.
True
False
Imagine you take out a loan of $10,000 at an annual interest rate of 12%. You make monthly payments of $200. Complete the first three rows of an amortization schedule below:
Hint: Monthly interest rate = Annual interest rate / 12
Payment #
Beginning Balance
Interest Paid
Principal Paid
Ending Balance
1
2
3