In: Finance
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
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 |