You purchased a car using some cash and borrowing $12,000 (the present value) for 53 months...
You purchased a car using some cash and borrowing $12,000 (the present value) for 53 months at 11% per year. Calculate the monthly payment (annuity). Then assume you have made ten payments. What is the balance (present value) of your loan?
The monthly payment at the specified loan rate over the given period is $______. (Round to the nearest cent.)
Homework Answers
Answer a.
Amount borrowed = $12,000
Annual interest rate = 11%
Monthly interest rate = 0.9167%
Number of payments = 53
$12,000 = Monthly payment * PVIFA(0.9167%, 53)
$12,000 = Monthly payment * (1 - (1/1.009167)^53) / 0.009167
$12,000 = Monthly payment * 41.83085
Monthly payment = $286.87
The monthly payment at the specified loan rate over the given period is $286.87
Answer b.
Remaining number of payments = 43
Balance of loan = $286.87 * PVIFA(0.9167%, 43)
Balance of loan = $286.87 * (1 - (1/1.009167)^43) / 0.009167
Balance of loan = $286.87 * 35.40484
Balance of loan = $10,156.59
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