Question
In: Finance
You have just purchased a car and taken out a $41,000 loan. The loan has a...
You have just purchased a car and taken out a
$41,000 loan. The loan has a five-year term with monthly payments and an APR of 6.1%.
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)?
Solutions
Expert Solution
EMI :
EMI = Loan / PVAF (r%, n)
PVAF = SUm [ PVF(r%, n) ]
PVF(r%, n) = 1 / ( 1 + r)^n
r = Int rate per period
n = No. of periods
| Particulars | Amount |
| Loan Amount | $ 41,000.00 |
| Int rate per Month | 0.5083% |
| No. of Months | 60 |
EMI = Loan Amount / PVAF (r%, n)
Where r is Int rate per Month & n is No. of Months
= $ 41000 / PVAF (0.0051 , 60)
= $ 41000 / 51.6014
= $ 794.55
PVAF = SUm [ PVF(r%, n) ]
PVF(r%, n) = 1 / ( 1 + r)^n
r = Int rate per period
n = No. of periods
How to calculate PVAF using Excel:
=PV(Rate,NPER,-1)
Rate = Disc Rate
NPER = No.of periods
Loan Amorization Schedule:
| Period | Opening Bal | EMI | Int | Principal Repay | Closing Outstanding |
| 1 | $ 41,000.00 | $ 794.55 | $ 208.42 | $ 586.14 | $ 40,413.86 |
| 2 | $ 40,413.86 | $ 794.55 | $ 205.44 | $ 589.12 | $ 39,824.75 |
| 3 | $ 39,824.75 | $ 794.55 | $ 202.44 | $ 592.11 | $ 39,232.64 |
| 4 | $ 39,232.64 | $ 794.55 | $ 199.43 | $ 595.12 | $ 38,637.52 |
| 5 | $ 38,637.52 | $ 794.55 | $ 196.41 | $ 598.15 | $ 38,039.37 |
| 6 | $ 38,039.37 | $ 794.55 | $ 193.37 | $ 601.19 | $ 37,438.19 |
| 7 | $ 37,438.19 | $ 794.55 | $ 190.31 | $ 604.24 | $ 36,833.94 |
| 8 | $ 36,833.94 | $ 794.55 | $ 187.24 | $ 607.31 | $ 36,226.63 |
| 9 | $ 36,226.63 | $ 794.55 | $ 184.15 | $ 610.40 | $ 35,616.23 |
| 10 | $ 35,616.23 | $ 794.55 | $ 181.05 | $ 613.50 | $ 35,002.73 |
| 11 | $ 35,002.73 | $ 794.55 | $ 177.93 | $ 616.62 | $ 34,386.10 |
| 12 | $ 34,386.10 | $ 794.55 | $ 174.80 | $ 619.76 | $ 33,766.35 |
| 13 | $ 33,766.35 | $ 794.55 | $ 171.65 | $ 622.91 | $ 33,143.44 |
| 14 | $ 33,143.44 | $ 794.55 | $ 168.48 | $ 626.07 | $ 32,517.37 |
| 15 | $ 32,517.37 | $ 794.55 | $ 165.30 | $ 629.26 | $ 31,888.11 |
| 16 | $ 31,888.11 | $ 794.55 | $ 162.10 | $ 632.45 | $ 31,255.66 |
| 17 | $ 31,255.66 | $ 794.55 | $ 158.88 | $ 635.67 | $ 30,619.99 |
| 18 | $ 30,619.99 | $ 794.55 | $ 155.65 | $ 638.90 | $ 29,981.09 |
| 19 | $ 29,981.09 | $ 794.55 | $ 152.40 | $ 642.15 | $ 29,338.94 |
| 20 | $ 29,338.94 | $ 794.55 | $ 149.14 | $ 645.41 | $ 28,693.52 |
| 21 | $ 28,693.52 | $ 794.55 | $ 145.86 | $ 648.69 | $ 28,044.83 |
| 22 | $ 28,044.83 | $ 794.55 | $ 142.56 | $ 651.99 | $ 27,392.84 |
| 23 | $ 27,392.84 | $ 794.55 | $ 139.25 | $ 655.31 | $ 26,737.53 |
| 24 | $ 26,737.53 | $ 794.55 | $ 135.92 | $ 658.64 | $ 26,078.90 |
| 25 | $ 26,078.90 | $ 794.55 | $ 132.57 | $ 661.98 | $ 25,416.91 |
| 26 | $ 25,416.91 | $ 794.55 | $ 129.20 | $ 665.35 | $ 24,751.56 |
| 27 | $ 24,751.56 | $ 794.55 | $ 125.82 | $ 668.73 | $ 24,082.83 |
| 28 | $ 24,082.83 | $ 794.55 | $ 122.42 | $ 672.13 | $ 23,410.70 |
| 29 | $ 23,410.70 | $ 794.55 | $ 119.00 | $ 675.55 | $ 22,735.15 |
| 30 | $ 22,735.15 | $ 794.55 | $ 115.57 | $ 678.98 | $ 22,056.17 |
| 31 | $ 22,056.17 | $ 794.55 | $ 112.12 | $ 682.43 | $ 21,373.73 |
| 32 | $ 21,373.73 | $ 794.55 | $ 108.65 | $ 685.90 | $ 20,687.83 |
| 33 | $ 20,687.83 | $ 794.55 | $ 105.16 | $ 689.39 | $ 19,998.44 |
| 34 | $ 19,998.44 | $ 794.55 | $ 101.66 | $ 692.89 | $ 19,305.55 |
| 35 |
 jeff jeffy answered 1 year agoRelated SolutionsYou have just purchased a car and taken out a $46000 loan. The loan has a...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...
You have just purchased a car and taken out a $50,000 loan. The loan has a...You have just purchased a car and taken out a $50,000 loan. The
loan has a 5-year term with monthly payments and an APR of 6%. How
much will you pay in interest, and how much will you pay in
principle, during the first month and second month? (Hint:
construct an amortization table to show the breakdown of interest
and principal paid in the first two months).
You have just purchased a car and taken out a $40,000 loan. The loan has a?...You have just purchased a car and taken out a $40,000 loan. The
loan has a? five-year term with monthly payments and an APR of 6.3
%
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?...
You have just purchased a car and taken out a $39,000 loan. The loan has a...You have just purchased a car and taken out a $39,000 loan. The
loan has a five-year term with monthly payments and an APR of 5.5%
. 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...
You have just purchased a car and taken out a $37,000 loan. The loan has a...You have just purchased a car and taken out a $37,000 loan. The
loan has a five-year term with monthly payments and an APR of
6.1%.
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,...
You have just purchased a car and taken out a $35,000 loan. The loan has a...You have just purchased a car and taken out a $35,000 loan. The
loan has a five-year term with monthly payments and an APR of
5.7%.
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,...
You have just purchased a car and taken out a $ 50000 loan. The loan has...You have just purchased a car and taken out a $ 50000 loan. The
loan has a five-year term with monthly payments and an APR of
6.3%. 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...
You have just purchased a car and taken out a $35,000 loan. The loan has a...You have just purchased a car and taken out a $35,000 loan. The
loan has a five-year term with monthly payments and an APR of
6.1%.
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,...
You have just purchased a car and taken out a $50,000 loan. The loan has a...You have just purchased a car and taken out a $50,000 loan. The
loan has a five-year term with monthly payments and an APR of
6.0%.
How much will you pay in interest, and how much will you pay
in principal, during the 1st, 2nd, and 12th month?
How much will you pay in interest, and how much will you pay
in principal, at the end of the 4th year?
How much will you pay in interest, and how much...
You have just purchased a car and taken out a $ 48 comma 000$48,000 loan. The...You have just purchased a car and taken out a
$ 48 comma 000$48,000
loan. The loan has a five-year term with monthly payments and an
APR of
5.8 %5.8%.
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...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
ADVERTISEMENT
|