Question

You have just purchased a car and taken out a $46000 loan. The loan has a​ five-year term with monthly payments and an APR of 6.5 %

a. How much will you pay in​ interest, and how much will you pay in​ principal, during the first​ month, second​ month, and first​ year? (Hint: Compute the loan balance after one​ month, two​ months, and one​ year.)

b. How much will you pay in​ interest, and how much will you pay in​ principal, during the fourth year​ (i.e., between three and four years from​ now)?

​(Note: Be careful not to round any intermediate steps less than six decimal​ places.)

a. How much will you pay in​ interest, and how much will you pay in​ principal, during the first​ month, second​ month, and first​ year? (Hint: Compute the loan balance after one​ month, two​ months, and one​ year.)

During the first​ month, you will pay__________in principal.  ​(Round to the nearest​ cent.)

During the first​ month, you will pay ______________ in interest.  ​(Round to the nearest​ cent.)

During the second​ month, you will pay_____________in principal.  ​(Round to the nearest​ cent.)

During the second​ month, you will pay_________in interest.  ​(Round to the nearest​ cent.)

During the first​ year, you will pay___________in principal.  ​(Round to the nearest​ cent.)

During the first​ year, you will pay__________in interest.  ​(Round to the nearest​ cent.)

b. How much will you pay in​ interest, and how much will you pay in​ principal, during the fourth year​ (i.e., between three and four years from​ now)?  

During the fourth year you will pay__________in principal.  ​(Round to the nearest​ cent.)

During the fourth​ year, you will pay_____________in interest.  ​(Round to the nearest​ cent.)

Answer 1

a)                               Interest paid                       Principal paid

1st month                   $249                                  $518

2nd month                  $245                                  $522

1st year                      $2716                                $6484

b)                               Interest paid                       Principal paid

4th year                      $922                                 $8278

note: the above calculation of emi is performed by using goal seek function in excel

first you set the format as above (take an assumed emi , say $200

next go to function: data - what if analysis - goal seek

set the amount after last emi deduction (month 60) to 0 by changing emi of 1st 1month (note all emis of month should be same - same value)