Question

In: Finance

Sherry borrows $10,000 to purchase a car. The loan contract specified a rate of 6%, compounded...

Sherry borrows $10,000 to purchase a car. The loan contract specified a rate of 6%, compounded monthly. The amortization period was set at 8 years, with payments made monthly. What would be Sherry’s loan balance after 15 months?

  1. $1,904
  2. $5,621
  3. $8,029
  4. $8,735

The answer is $8,735, but I would like to know the steps to get the answer.

Solutions

Expert Solution

First, in a financial calculator, Find for PMT,

Punch in: I/Y=6%/12 =0.500% ,N= 8*12 =96, PV=10000

PMT will be 131.41

jeff jeffy answered 8 months ago
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