d)\"To purchase a new car, you borrow $29,000 for 7 years at the rate of interes
ID: 2787188 • Letter: D
Question
d)"To purchase a new car, you borrow $29,000 for 7 years at the rate of interest of 13.9% APR compounded monthly, and you make monthly car payments. How much interest do you pay on the 9th payment?"
e)"Suzan is considering buying a home for $379,000. If she makes a down payment of $72,000 and takes out a mortgage on the rest of the money at 6.92% compounded monthly for 8 years. What will be the principal payment for her 56th payment? (Assume she makes monthly payments)"
f)"You receive a loan for $11,931 where the APR is 7.6%, compounded monthly. You make a payment of $931.83 on this loan every 6 months (i.e., 2 payments per year), which will enable you pay off the loan in eactly 9 years. Immediately after making your regular payment at the end of 5 years, you desire to pay the remainder of the loan in a single payment. Compute the amount you must pay for the remainder of the loan."
Explanation / Answer
d.
Find the monthly payment of the loan
Periodic payment of a loan is given by
P = L[r(1 + r)^n]/[(1 + r)^n - 1]
P - Periodic payment = ?
r - Interst rate = 0.139/12
n - Term = 7*12 = 84
L - Loan amount = 29000
P = 29000[(0.139/12)(1 + (0.139/12))^84]/[(1 + (0.139/12))^84 - 1] = 541.86
Monthly payment = 541.86
Prepare the amortization for the first 9 payments as below:
Interest component = $316.04
Year Balance at the beginning of period Total payment Amount to interest = Balance *(0.139/12) Amount to principal = Total payment - Amount to interest Ending Balance 1 29000 541.86 335.92 205.94 28794.06 2 28794.06 541.86 333.53 208.33 28585.73 3 28585.73 541.86 331.12 210.74 28374.99 4 28374.99 541.86 328.68 213.18 28161.80 5 28161.80 541.86 326.21 215.65 27946.15 6 27946.15 541.86 323.71 218.15 27728.00 7 27728.00 541.86 321.18 220.68 27507.33 8 27507.33 541.86 318.63 223.23 27284.09 9 27284.09 541.86 316.04 225.82 27058.27Related Questions
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