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suppose you took out a fully amortized $30,000 automobile loan to finance your purchase over 48...

suppose you took out a fully amortized $30,000 automobile loan to finance your purchase over 48 months at an APR of 3.5%. So far, you have made two years of payments in a timely fashion so the next payment will be your 25th. what percentage of the next payment will be allocated toward reducing the outstanding balance on the loan and what percentage will be interest?

Solutions

Expert Solution

EMI = Loan Amount / PVAF (r%,n)

= $ 30,000 / PVAF(0.2917%, 48)

= $ 30,000 / 44.7307

= $ 670.68

Amortization Schedule:

In 25th instalment, 625.21 is paid towards principal repayment and 45.27 is paid as int

% as principal repayment = 625.21 / 670.78

= 0.93 i.e 93%

% as int payment = 45.27 / 670.78

= 0.07 i.e 7%

jeff jeffy answered 2 weeks ago
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