Answer and Explanation:
For an amortizing loan, the periodic payments would be determined by using the concept of an annuity, which will produce equal periodic payments.
, where
PMT: periodic payment
I: Annual percentage interest rate
N: Number of payments
The principal of an amortizing loan will be paid down within the life of loan. The interest will be estimated based on the remaining balance of loan. With that being said, the principal payments will increasing over periods while the interest payments will be decreasing until the principal is paid off completely.