7. You buy a new 2019,755 hp Corvette ZR1 for $122,900. You have been saving up

Question

7. You buy a new 2019,755 hp Corvette ZR1 for $122,900. You have been saving up for years, but need to borrow of the purchase price to acquire the vehicle. You take out a 5 year loan at 8 percent per year. and make monthly payments. a) How much did you borrow? How much is your monthly payment? b) Fill in the loan chart for the first three payments c) How much of the second payment is interest and how much is principal? d) After making the third payment, you decide to refinance. What is the unpaid balance after the 3rd payment?

Explanation / Answer

a) Total vehicle value is = 122,900 , Loan take for 3/4 of the vehicle value which is 92175. So the borrowed amount is $92175 and the monthly payment is $1869.

b) The loan chart for first 3 payment break up of Principal and Interest given below

c) Second payment Interest is $609 and principal is $1263

d) The unpaid balance after 3 payment is $88,386/-

S.No Monthly Installment Interest Principal Balance 0         92,175 1                         1,869           615            1,254         90,921 2                         1,869           606            1,263         89,658 3                         1,869           598            1,271         88,386

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