Alice purchases a boat The purchase price is $18300 and she makes a down payment

Question

Alice purchases a boat The purchase price is $18300 and she makes a down payment of $3.800. She finances the balance for six years. There are level end- of-month payments (except for a slightly reduced final payment) and the loan is made at an annual effective rate of 5.2%.

(a) Find the amount of the first seventy-one payments.

(b) Find the outstanding loan balance just after twenty-fourth payment the twenty-fourth payment.

Explanation / Answer

FV=P(1+rt) , where FV=Future Value, P =Principal, r = Rate of Interest and t=Time Period. P=(18300-3800),r=0.052,t=6 19024 No of instalments 72 Monthly Instalments 264 a>First Seventyone payments=71*264 18744 b>Outstanding after 24th payment=19024-24*264 12688

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