Question

sixty months ago, you got a loan from your bank for $10,000. This is a ten year loan with an APR of 12% and with monthly payments of $143.47 each. Today, you decided you want to pay off the loan in two years rather than the remaining life of the loan.

What is the balance of the loan today?

2. How much more do you have to add to your monthly payment in order to accomplish your goal of paying off the loan earlier?

Answer 1

1)

DV/1A 4 Due today PV*(1+r)^n-P*((1+r)^n-1))/ 5 Due today $ 9,732.57 6 =(10000*(1+(12%/12))^6)-143.47*((1+(12%/12))^6-1)/(12%/12)

2)

Monthly payment PVA:((1-(1:(1+r)^n)]=r) Here, A Interest rate per annum B Number of years C Number of compoundings per per annum A:C Interest rate per period (r) BⓇC Number of periods (n) Present value (PVA) 12% 0.5 12 1% 10,000 Monthly payment 1,725.48 10000=((1-(1=(1+1%)^6))=1%) 143.47 Less: Current payment Addition to monthly payment $1,582.01

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