Emile bought a car for $27,000 three years ago. The loan had a 5 year term...

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Question

Emile bought a car for $27,000 three years ago. The loan had a 5 year term...

Emile bought a car for $27,000 three years ago. The loan had a 5 year term at 8% interest rate, and Emile has been making monthly payments for three years.

How much does he still owe on the car?

(Hint: first you will need to figure out the monthly payment on the 5 year loan.)

business finance

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Answer 1

Answer #1

Annual Interest rate				8%
Monthly interest rate (8/12)				0.67%

Loan amount				27000
Divide: Annuity PVF at 0.67% for 60 periods				49.31378
Monthly Instalment				547.5143

Loan tenure in months				60
Less: Loan repaid				36
Remaining tenure in months				24

Annuity factor at 0.67% for 24 periods				22.10965
Present value of Loan (547.51*22.10965)				12105.35

Loan outstanding after 3 years i.e. today: $ 12105.35

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Answer 2

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