On a 5-year, $20K car loan at 4% APR, how much money will you still owe...

On a 5-year, $20K car loan at 4% APR, how much money will you still owe after 3 years? (round to the nearest dollar, no pennies!)

Numeric Response

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Expert Solution

First we have to find monthly payment and need to use PMT function in EXCEL

=PMT(rate,nper,pv,fv,type)

rate=monthly interest=4%/12=0.333%

nper=number of periods=12*5=60

pv=loan amount=20,000

fv=0

type=0

=PMT(0.333%,60,-20000,0,0)

PMT=$368.33

The monthly payment=$368.33

Now we have make amortization schedule for next 36 payments (3 years). The ending balance at teh end of 36 period is the outstanding amount after 3 years

Periods	Opening balance	Monthly payment	Interest=(Opening balance*(4%/12))	Principal=monthly payment-Interest	Ending balance=Opening balance-principal
1	20000.00	368.33	66.67	301.66	19698.34
2	19698.34	368.33	65.66	302.67	19395.67
3	19395.67	368.33	64.65	303.68	19091.99
4	19091.99	368.33	63.64	304.69	18787.30
5	18787.30	368.33	62.62	305.71	18481.59
6	18481.59	368.33	61.61	306.73	18174.87
7	18174.87	368.33	60.58	307.75	17867.12
8	17867.12	368.33	59.56	308.77	17558.35
9	17558.35	368.33	58.53	309.80	17248.54
10	17248.54	368.33	57.50	310.84	16937.71
11	16937.71	368.33	56.46	311.87	16625.84
12	16625.84	368.33	55.42	312.91	16312.93
13	16312.93	368.33	54.38	313.95	15998.97
14	15998.97	368.33	53.33	315.00	15683.97
15	15683.97	368.33	52.28	316.05	15367.92
16	15367.92	368.33	51.23	317.10	15050.82
17	15050.82	368.33	50.17	318.16	14732.66
18	14732.66	368.33	49.11	319.22	14413.43
19	14413.43	368.33	48.04	320.29	14093.15
20	14093.15	368.33	46.98	321.35	13771.79
21	13771.79	368.33	45.91	322.42	13449.37
22	13449.37	368.33	44.83	323.50	13125.87
23	13125.87	368.33	43.75	324.58	12801.29
24	12801.29	368.33	42.67	325.66	12475.63
25	12475.63	368.33	41.59	326.74	12148.89
26	12148.89	368.33	40.50	327.83	11821.06
27	11821.06	368.33	39.40	328.93	11492.13
28	11492.13	368.33	38.31	330.02	11162.10
29	11162.10	368.33	37.21	331.12	10830.98
30	10830.98	368.33	36.10	332.23	10498.75
31	10498.75	368.33	35.00	333.33	10165.42
32	10165.42	368.33	33.88	334.45	9830.97
33	9830.97	368.33	32.77	335.56	9495.41
34	9495.41	368.33	31.65	336.68	9158.73
35	9158.73	368.33	30.53	337.80	8820.93
36	8820.93	368.33	29.40	338.93	8482.01

The outstanding amount after 3 years=$8482.01

jeff jeffy answered 1 year ago

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