Question

In: Finance

In December 2019, Dayanara bought a new BMW 328i car for $ 70,000 paying $ 8,000...

In December 2019, Dayanara bought a new BMW 328i car for $ 70,000 paying $ 8,000 suddenly. This agreed with Bank XYZ to pay the balance making equal annual payments in 6 years, at 9% interest.

a. Determine the amount of the annual payment that will pay off the debt.

b. Make the amortization table.

Please show process.

Expert Solution

- Loan amount = Price of car - down payment

Loan amount = $70,000 - $8,000

Loan amount = 62,000

a). Calculating the Annual Equal Payments:-

Where, P = Loan amount = $62,000

r = Periodic Interest rate = 9%

n= no of periods = 6 years

Annual Payments = $13,821.03

b). Constructing the amortization table:-

Year	Beg bal.	Payment	Interest amount	Principal Amount	End Bal.
1	62,000.00	13,821.03	5,580.00	8,241.03	53,758.97
2	53,758.97	13,821.03	4,838.31	8,982.72	44,776.25
3	44,776.25	13,821.03	4,029.86	9,791.17	34,985.08
4	34,985.08	13,821.03	3,148.66	10,672.37	24,312.71
5	24,312.71	13,821.03	2,188.14	11,632.89	12,679.82
6	12,679.82	13,821.03	1,141.18	12,679.85	(0.03)

Note- The following Columns are calculated based on:

- Interest amount = beg. Balance*Monthly interest rate

- Principal Amount = Payment - Interest amount

- End Bal. = Beg. Bal + Interest - Payment

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jeff jeffy answered 1 year ago

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