Question

Amortize a $35,000 car loan with a 5% annual interest rate and payments for 60 months (4) What is the monthly payment? (5) What will the balance on the loan be after 2 years of payments? (Assume that you just took out the loan) (6) How many months will it be before the car is halfway paid off?

Answer 1

Calculating Monthly Payment,

Using TVM Calculation,

PMT = [PV = 35,000, FV = 0, N = 60, I = 0.05/12]

PMT = $660.49

Monthly payment = $660.49

Calculating Balance after 2 years,

Using TVM Calculation,

FV = [PV = 35,000, PMT = -660.49, N = 24, I = 0.05/12]

FV = $22,037.90

Calculating Time Period of half payment,

Using TVM Calculation,

N = [PV = 35,000, FV = -17,500, PMT = -660.49, I = 0.05/12]

N = 32 months