Quantitative Problem: You need $17,000 to purchase a used car. Your wealthy uncl

Question

Quantitative Problem: You need $17,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 6 years, with the first payment to be made one year from today. He requires a 5% annual return a. What will be your annual loan payments? Round your answer to the nearest cent. Do not round intermediate calculations. $3349.30 b. How much of your first payment will be applied to interest and to principal repayment? Round your answer to the nearest cent. Do not round intermediate calculations. Interest: Principal repayment:$

Explanation / Answer

Interest = Interest Rate * Principal Amount = 0.05 * 17,000 = 850

Principal Repayment = Payment - Interest = 3,349.30 - 850 = 2,499.30

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