Question

In: Finance

A person amortizes a loan of $17000 for a car with a 5 years loan at...

A person amortizes a loan of $17000 for a car with a 5 years loan at the rate of 6.5% compounded monthly. (a) Find the montly payments. The payments are of $ . (b) Find the total interest charges. The interest is $ . (c) Find the principal remaining after 2 years. The principal remaining is of $ .

Solutions

Expert Solution

(a) Find the montly payments

EMI = [P *I * (1+I)^N]/[(1+I)^N-1]

where

P =loan amount or Principal = 17000

I = Interest rate per monthb=6.5%/12
[To calculate rate per month: if the interest rate per annum is 14%, the per month rate would be 14/(12 x 100)]

N = the number of installments=5*12 = 60

EMI = [17000 *(.065/12)* (1+(.065/12))^60]/[(1+(.065/12))^60-1]

= (92.0833333333*1.38281732421)/1.38281732421 -1

= 127.334428604/.38281732421

= 332.62

(b) Find the total interest charges

Interest on mortgage = (EMI*no. of installments) - loan amount

= (332.62*60) - 17000

= 19957.2-17000

= 2,957.20

(c) Find the principal remaining after 2 years.

The principal remaining is of $ 10852.82. Loan amortisation schedule is below

Month Opening Balance Total Payment interest paid principal paid end balance
1 17000.00 332.62 92.08 240.54 16759.46
2 16759.46 332.62 90.78 241.84 16517.62
3 16517.62 332.62 89.47 243.15 16274.47
4 16274.47 332.62 88.15 244.47 16030.01
5 16030.01 332.62 86.83 245.79 15784.22
6 15784.22 332.62 85.50 247.12 15537.09
7 15537.09 332.62 84.16 248.46 15288.63
8 15288.63 332.62 82.81 249.81 15038.83
9 15038.83 332.62 81.46 251.16 14787.67
10 14787.67 332.62 80.10 252.52 14535.15
11 14535.15 332.62 78.73 253.89 14281.26
12 14281.26 332.62 77.36 255.26 14026.00
13 14026.00 332.62 75.97 256.65 13769.35
14 13769.35 332.62 74.58 258.04 13511.31
15 13511.31 332.62 73.19 259.43 13251.88
16 13251.88 332.62 71.78 260.84 12991.04
17 12991.04 332.62 70.37 262.25 12728.79
18 12728.79 332.62 68.95 263.67 12465.12
19 12465.12 332.62 67.52 265.10 12200.02
20 12200.02 332.62 66.08 266.54 11933.48
21 11933.48 332.62 64.64 267.98 11665.50
22 11665.50 332.62 63.19 269.43 11396.07
23 11396.07 332.62 61.73 270.89 11125.18
24 11125.18 332.62 60.26 272.36 10852.82

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

If you accept a car loan of $20,000 for 5 years at an interest rate of...
If you accept a car loan of $20,000 for 5 years at an interest rate of 3%, what is the monthly payment?
A car loan is taken for $13,000 to be paid back in 5 years, with monthly...
A car loan is taken for $13,000 to be paid back in 5 years, with monthly payments of $495. What nominal annual interest rate is being charged in this loan? 1) 27.42% 2) 42.26% 3) 39.00% 4) 2.29%
Loan 1: Amortize a $35,000 car loan at 4.5% over 5 years. How much is the...
Loan 1: Amortize a $35,000 car loan at 4.5% over 5 years. How much is the monthly payment? How much will the borrower pay in total interest?
George bought a new car with a 4.1% interest rate for 5 years. The loan is...
George bought a new car with a 4.1% interest rate for 5 years. The loan is for $35,000. What is the interest portion of the first 12 payments?
Set up an amortization schedule that amortizes $500,000 with 5 years of cyclical quarterly payments. The...
Set up an amortization schedule that amortizes $500,000 with 5 years of cyclical quarterly payments. The annual interest rate is 6%. The Payment Schedule is:one-third normal payments at the end of quarter 1, normal payments at the end of quarters 2 and 3, and 50% of a normal payment at the end of quarter 4
Set up an amortization schedule that amortizes $500,000 with 5 years of cyclical quarterly payments. The...
Set up an amortization schedule that amortizes $500,000 with 5 years of cyclical quarterly payments. The annual interest rate is 6%. The payment schedule is: " one-third a normal payment" at the end of quarter 1, "normal payments" at the end of quarters 2 and 3, and "50% of a normal payment" at the end of quarter 4. please solve in excel and list equations that go in the cells. Thank you :)
George bought a new car with a 4.1% interest rate fro 5 years. The loan is...
George bought a new car with a 4.1% interest rate fro 5 years. The loan is for $35,000. What is the interest portion of the 48th payment?
a loan of 17000 is to be repaid by 4 equal payments due in 2,5,6and 9...
a loan of 17000 is to be repaid by 4 equal payments due in 2,5,6and 9 years respectively. determine the size of the equal payments if the loan was granted at 12% p.a. compounded semi- annually.
You purchase a car for 10,000 The car loan is financed with a 5% per year,...
You purchase a car for 10,000 The car loan is financed with a 5% per year, 5 year loan with annyual payments starting at time 1 (1 year from today) through time 5 Each payment reduces the principal by a certain amount until the loan is completely paid off. What is the interest component of the first payment? (I am allowed to use the TI-34 and BAII Plus calculators)
The maturity of the balloon loan is 5 years, amortization period is 30 years, loan amount...
The maturity of the balloon loan is 5 years, amortization period is 30 years, loan amount is $85,000 with annual interest rate 4.5% and monthly payments. What is the monthly payment for this balloon mortgage? What is the balloon payment at the end of five years for this balloon mortgage?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT