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5. Suppose you borrowed $15,000 at a rate of 8.5% and must repay it in 5 equal installments at the end of each of the next 5
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Answer #1

Ans Balance after third year = $ 6741.72

P = Regular Payments
PV = Loan Amount
r = rate of interest
n = no of periods
P = r (PV)
1 - (1 + r )-n
P = 8.5%*15000
1 - (1 / (1 + 8.5%)^5))
P = 1275
0.334954577
P = 3806.49
Beginning Balance Interest Principal Ending Balance
1 $15,000.00 $1,275.00 $2,531.49 $12,468.51
2 $12,468.51 $1,059.82 $2,746.66 $9,721.85
3 $9,721.85 $826.36 $2,980.13 $6,741.72
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