You bought a car three years ago for $20,000 and financed $16,000 at 6 percent APR...

You bought a car three years ago for $20,000 and financed $16,000 at 6 percent APR for 60 months. You are now thinking about trading in your vehicle for a new one and would like to know how much you still owe on the loan. Assuming that you have made 36 payments so far, what is the balance remaining on your loan?

Expert Solution

Ans $6979.25

		P =	Regular Payments
		PV =	Loan Amount
		r =	rate of interest
		n =	no of periods

		P =	r (PV)
			1 - (1 + r )^-n

		P =	(6.00%/12)*16000
			1 - (1 / (1 + 6.00%/12)^60))

		P =	80
			0.258627804

		P =	309.32

	Beginning Balance	Interest	Principal	Ending Balance
1	$16,000.00	$80.00	$229.32	$15,770.68
2	$15,770.68	$78.85	$230.47	$15,540.20
3	$15,540.20	$77.70	$231.62	$15,308.58
4	$15,308.58	$76.54	$232.78	$15,075.80
5	$15,075.80	$75.38	$233.95	$14,841.85
6	$14,841.85	$74.21	$235.12	$14,606.74
7	$14,606.74	$73.03	$236.29	$14,370.45
8	$14,370.45	$71.85	$237.47	$14,132.97
9	$14,132.97	$70.66	$238.66	$13,894.31
10	$13,894.31	$69.47	$239.85	$13,654.46
11	$13,654.46	$68.27	$241.05	$13,413.41
12	$13,413.41	$67.07	$242.26	$13,171.15
Year #1 End
13	$13,171.15	$65.86	$243.47	$12,927.68
14	$12,927.68	$64.64	$244.69	$12,682.99
15	$12,682.99	$63.41	$245.91	$12,437.08
16	$12,437.08	$62.19	$247.14	$12,189.94
17	$12,189.94	$60.95	$248.38	$11,941.57
18	$11,941.57	$59.71	$249.62	$11,691.95
19	$11,691.95	$58.46	$250.87	$11,441.09
20	$11,441.09	$57.21	$252.12	$11,188.97
21	$11,188.97	$55.94	$253.38	$10,935.59
22	$10,935.59	$54.68	$254.65	$10,680.94
23	$10,680.94	$53.40	$255.92	$10,425.02
24	$10,425.02	$52.13	$257.20	$10,167.82
Year #2 End
25	$10,167.82	$50.84	$258.49	$9,909.34
26	$9,909.34	$49.55	$259.78	$9,649.56
27	$9,649.56	$48.25	$261.08	$9,388.48
28	$9,388.48	$46.94	$262.38	$9,126.10
29	$9,126.10	$45.63	$263.69	$8,862.40
30	$8,862.40	$44.31	$265.01	$8,597.39
31	$8,597.39	$42.99	$266.34	$8,331.05
32	$8,331.05	$41.66	$267.67	$8,063.38
33	$8,063.38	$40.32	$269.01	$7,794.38
34	$7,794.38	$38.97	$270.35	$7,524.02
35	$7,524.02	$37.62	$271.70	$7,252.32
36	$7,252.32	$36.26	$273.06	$6,979.25

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