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Big Stone II Amortization Examples <br /> July 8, 2009 <br /> I. Home Mortgage Example <br /> To illustrate how the capital cost of the Big Stone II project will be amortized, consider the <br /> similar example of a home mortgage: <br /> The home has a 30 year mortgage of$123,000 at 5.5%/year interest rate. The monthly payments <br /> will be: <br /> $123,000 * (A/P, 360 months, 5.5%/12) _ $689.38 per month. <br /> The mortgage payment of$698.38 per month includes payment of the principal and payment of <br /> interest. <br /> The payments of principal and interest in any particular year are illustrated below: <br /> Annual Payments on a $123,000 Mortgage, <br /> 30 years at 5.5% per year <br /> $9,000 — <br /> $8,000 <br /> $7,000 , Payments <br /> $6,000 toward <br /> principal —•—Interest <br /> $5,000 —.—Annual Payments <br /> ° $4,000 <br /> $3,000 <br /> $2,000 Interest <br /> $1,000 <br /> • <br /> $0 <br /> Year <br /> Over the 30 year period: <br /> Total of monthly payments = 360 * $689.38 per month = $248,177 <br /> Payments toward principal = ($123,000) <br /> Interest = $125,177 <br />