2. CTL (Concrete Testing Lab) borrowed $100,000 for new equipment at 12% per yea
ID: 2808649 • Letter: 2
Question
2. CTL (Concrete Testing Lab) borrowed $100,000 for new equipment at 12% per year, compounded quarterly. It is to be paid back over three years in equal quarterly payments quarterly a. How much are the quarterly payments? b. How much interest is in the 7th payment c. How much principal is in the 7th payment? d. What is the remaining balance after the 7th payment? e. Two years after borrowing the money, you decide to pay off the loan. You have not yet made the payment due at that time. What is the payoff amount for the loan?Explanation / Answer
a-
Payment
r*(PV)/ 1- (1+r)^-n
.03*100000 / 1-(1.03)^-12
3000/.2986
10046.88547
period
beginning balance
Quarterly payment
Interest = beginning balance*3%
principal = quarterly payment-interest
year end balance = beginning balance-principal paid
0
1
100000
10046.89
3000
7046.89
92953.11
2
92953.11
10046.89
2788.593
7258.2967
85694.8133
3
85694.81
10046.89
2570.844
7476.045601
78218.7677
4
78218.77
10046.89
2346.563
7700.326969
70518.44073
5
70518.44
10046.89
2115.553
7931.336778
62587.10395
6
62587.1
10046.89
1877.613
8169.276881
54417.82707
7
54417.83
10046.89
1632.535
8414.355188
46003.47188
8
46003.47
10046.89
1380.104
8666.785844
37336.68604
b-
interest in 7th payment
1632.535
C-
principal in 7th payment
8414.355
d-
remaining balance after 7th payment
46003.47
E-
balance due at 8th payment + interest due
46003.34+1380.104
47383.444
a-
Payment
r*(PV)/ 1- (1+r)^-n
.03*100000 / 1-(1.03)^-12
3000/.2986
10046.88547
period
beginning balance
Quarterly payment
Interest = beginning balance*3%
principal = quarterly payment-interest
year end balance = beginning balance-principal paid
0
1
100000
10046.89
3000
7046.89
92953.11
2
92953.11
10046.89
2788.593
7258.2967
85694.8133
3
85694.81
10046.89
2570.844
7476.045601
78218.7677
4
78218.77
10046.89
2346.563
7700.326969
70518.44073
5
70518.44
10046.89
2115.553
7931.336778
62587.10395
6
62587.1
10046.89
1877.613
8169.276881
54417.82707
7
54417.83
10046.89
1632.535
8414.355188
46003.47188
8
46003.47
10046.89
1380.104
8666.785844
37336.68604
b-
interest in 7th payment
1632.535
C-
principal in 7th payment
8414.355
d-
remaining balance after 7th payment
46003.47
E-
balance due at 8th payment + interest due
46003.34+1380.104
47383.444
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