You've just borrowed $30,000 with an annual interest rate of 8.5% and must repay it in...

You've just borrowed $30,000 with an annual interest rate of 8.5% and must repay it in 5 equal installments at the end of each of the next 5 years. How much would you still owe after you have made the first payment?

$23,034.13

$19,118.33

$22,343.11

$22,112.76

Expert Solution

Loan amount after first payment would be $ 24,937.03

Loan Amortization Schedule:

Year	Beginning Loan	Interest Expense	Annual Payment	Reduction of loan	Ending Loan
	a	b=a*8.5%	c	d=c-b	e=a-d
1	$ 30,000.00	$ 2,550.00	$ 7,612.97	$ 5,062.97	$ 24,937.03
2	$ 24,937.03	$ 2,119.65	$ 7,612.97	$ 5,493.33	$ 19,443.70
3	$ 19,443.70	$ 1,652.71	$ 7,612.97	$ 5,960.26	$ 13,483.44
4	$ 13,483.44	$ 1,146.09	$ 7,612.97	$ 6,466.88	$ 7,016.56
5	$ 7,016.56	$ 596.41	$ 7,612.97	$ 7,016.56	$ 00.00

Working:

Annual payment	=pmt(rate,nper,pv)			Where,
	$ 7,612.97			rate	=	8.50%
				nper	=	5
				pv	=	$ -30,000.00

jeff jeffy answered 5 months ago

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