off the loan by making annual payments for the next four years at the end of eac

Question

off the loan by making annual payments for the next four years at the end of each year. Her bank is charging her an she called to ask that you help her compute the annual payments necessary to repay her loan. was a new car. She took out an amortized loan for $25,000-with no ($0) down payment. She agreed to pay interest rate of 8% per year. Yesterday, Calculate the annual payment and complete the following loan amortization table: Beginning Amount Interest Paid Principal Paid Year Payment Ending Balance 1 $25,000.00 $0.00 Flash Playar MAC 31, 108 3 3 34.1 0 2004-2016 Aglia Al rights reserved 2013 Cengege Unarning except as notod All righes reeved Continue without saving

Explanation / Answer

Solution :- The amount of loan = 25000 Rate of interest = 8% For finding the installment amount 25000    =      X*PVAF(8%,4) 25000     =      X*3.312 X    =     25000 / 3.312 7548.0813 Amortisation Schedule Year Beginning Amt. Payment Interest Principal Closing Balance 1          25,000.00    7,548.08    2,000.00    5,548.08    19,451.92 2          19,451.92    7,548.08    1,556.15    5,991.93    13,459.99 3          13,459.99    7,548.08    1,076.80    6,471.28       6,988.71 4            6,988.71    7,548.08        559.10    6,988.98                   -   Interest = 8% of Opening balance Principal is Payment less Interest Closing is Opening + interest - Payment

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