Example - Interest Only and Normal Payments

Facts     Santos accepts a note from Kelley in payment for his business. The note, dated September 5, 2025, has a face amount of $500,000. Monthly interest only payments at 9% start October 1, 2025 and continue through July 1, 2030 (58 payments). The remaining balance is to be paid off in 60 regular monthly payments beginning August 1, 2030.

Needed     The amount of the interest only and regular monthly payments.

Settings     This example assumes Normal amortization (Compute Method) and a Year Length of 365 days (set in the Calculations group on the Configuration ribbon).

1. Enter the information on the first two cash flow lines as shown below.

   ** SCREEN SHOT HERE **

2. Click in the Amount field on the Payment / second cash flow line and press [F2]. Choose Interest Only from the drop-down menu as the type of Special Series.
3. On the third cash flow line, choose Payment as the Event; enter 080119 as the Date; enter [U] for Unknown in the Amount field; enter 60 in the Number field; and choose Monthly as the Period. Your screen will look this this:

   ** SCREEN SHOT HERE **

4. Press [F9], [Ctrl]+[U], or click Calculate from the Compute group and then press [F4] or click the Amortization Schedule button.

Solution     The Payment Amount during the payoff phase is $10,379.18. The Interest Only Payment Amounts will display on the amortization schedule.