Question

In: Finance

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

Solutions

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

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