Question

The third file is for a client named Alexei. Alexei took out a personal loan exactly one year ago with Harrison

Bank. From his file, you have noted the following information:

Original loan amount: $36,000

Current loan outstanding: $30973.77

Monthly repayment: $700

Next repayment: Due exactly 1 month from now

Interest rate on loan:i1212=10%

For the purposes of the remaining questions, use the rounded values given above. Using this information, determine the following:

How much principal has Alexei repaid over the last year? Give your answer to the nearest cent, and do NOT

include a dollar sign.

How much interest has Alexei been charged over the past year? Give your answer to the nearest cent, and do NOT include a dollar sign.

If Alexei continues making monthly repayments of $700, and if the interest rate does not change, how many further FULL repayments does he expect to have to make in order to repay the loan? Do NOT include any final smaller repayment to pay off the remaining balance.

Answer 1

Original loan amount: $36,000

Current loan outstanding: $30973.77

Monthly repayment: $700

Number of payments made=12

Monthly interest rate =(10/12)%=0.8333%

 

Answer to the questions can be found from following payment schedule:

PAYMENT SCHEDULE:

	A	B	C=A*0.83333%
Month	Beginning Balance	Monthly Payment	Interest Payment	Principal Payment	Ending Balance
0					$36,000.00
1	$36,000.00	$700.00	$300.00	$400.00	$35,600.00
2	$35,600.00	$700.00	$296.67	$403.33	$35,196.67
3	$35,196.67	$700.00	$293.31	$406.69	$34,789.97
4	$34,789.97	$700.00	$289.92	$410.08	$34,379.89
5	$34,379.89	$700.00	$286.50	$413.50	$33,966.39
6	$33,966.39	$700.00	$283.05	$416.95	$33,549.44
7	$33,549.44	$700.00	$279.58	$420.42	$33,129.02
8	$33,129.02	$700.00	$276.08	$423.92	$32,705.09
9	$32,705.09	$700.00	$272.54	$427.46	$32,277.64
10	$32,277.64	$700.00	$268.98	$431.02	$31,846.62
11	$31,846.62	$700.00	$265.39	$434.61	$31,412.01
12	$31,412.01	$700.00	$261.77	$438.23	$30,973.77
	SUM	$8,400.00	$3,373.77	$5,026.23

 

Alexei repaid over the last year:

ANSWER: 5026.23

 

Interest has Alexei been charged:

ANSWER: 3373.77

 

FULL repayments:

 

NUMBER OF FURTHER FULL PAYMENTS REQUIRED = 55

NUMBER OF FURTHER FULL PAYMENTS REQUIRED = 55