Question

A $10,000 loan is to be repaid in monthly equal payments in 10 years with an annual effective interest rate of 19.56% charged against the unpaid balance. What principal remains to be paid after the third payment?

Answer 1

Solution:-

As given,

Loan = 10000

Monthly rate = 19.56/12 = 1.63% per month

Time = 10*12 = 120 months = 120 payments

Monthly Payment =10000*(A/P,1.63%,120)

                                 =10000*0.019035

                                 =190.35

O/s Balance	Installment	Interest [email protected]%	Principle=Instalment -Interest	Closing Balance=O/s balance -Principle
10000	190.35	163	27.35	9972.65
9972.65	190.35	162.55	27.8	9944.85
9944.85	190.35	162.10	28.25	9916.6

Hence, Principle amount remains to be paid after 3rd payment shall be $9916.6