Subject: interest rate
Hi, my name is anthony.
I think that what you are looking for is called amortizing the loan. I want to illustrate the method with a smaller example. Suppose that I borrow $1,000 for 6 months at an annual interest rate of 12%. I have calculated the monthly payments to be $172.55. (I know that the calculation of the monthly payment is your question and I will return to it later.) The payment schedule is in the table below.
The reasoning behind the schedule above is the following. At the first of month 1 I have borrowed $1,000 at 12% per year. Hence in one month the interest owing will be onetwelth of 12% of the principle which is $1,000. Thus the interest owing is ^{0.12}/_{12} x $1,000 = $10.00. Hence $10.00 of the $172.55 payment goes toward the interest and the difference, $162.55, is applied to the princple. Thus at the beginning of month 2 I owe $1,000  $162.55 = $837.45. Thus in the second month I have borrowed $837.45 and hence owe ^{0.12}/_{12} x $837.45 = $8.37 in interest. Therefore $8.37 of my $172.55 payment goes to interest and the remainder, $172.55  $8.37 = $164.18 goes toward he principle. Thus at the beginning of the third month I owe $837.45  $164.18 = $673.27. This procedure continues for 6 months when the unpaid balance is $0. (The difference between $170.82 and $170.85 is roundoff error.) The procudure to calculate the monthly payments for your loan of $10,000 at 11.7% per year for 5 years is as follows. Assume that the payment is $M per month. Complete the 60 rows in the table above that correspond to 5 years. In each of the 60 rows the Unpaid balance column will be an algebraic expression involving $M. The expression in the Unpaid balance column and the sixtieth row must be zero so set the exprression equal to zero and solve for $M. The result is the following formula for $M. For your situation the monthly payment is Penny
