Question

Alexander takes out a 6-year loan L that he repays using the amortization method. He makes monthly payments at a nominal annual interest rate of 7.2% compounded monthly. The first payment is $700 and is to be paid one month from the date of the loan. Each succeeding monthly payment will be 3% lower than the prior payment. Calculate the loan amount and the outstanding loan balance after the 46 th payment.

L= and B46=


NOTE:
Loan = PV(all the payments) and Outstanding Loan Balance = PV(all remaining payments)

L=700[v+(0.97)v^2+.....+(0.97)71v^72]
B46=700[(0.97)^46v+(0.97)^47v^2.....+(0.97)^71v^26]

Answer 1

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