Precalculus

you borrow $5,000 from your parents to purchase a used car. The arrangements of the loan are such that you make payments of $250 per month toward the balance plus 1% interest on the unpaid balance from the previous month. (a) Find the first year monthly payments and the unpaid balance after each month. (b) Find the total amount of interest paid over the term of the loan.

  1. 👍 0
  2. 👎 0
  3. 👁 745
  1. create a table (amortization table)

    time-interest-payment-balance
    now ---- 0 ------0 ------ 5000.00
    1 ---- 50.00 ---300.00 - 4475.00
    2 ---- 44.75 ---294.75 - 4225.00
    3 ---- 42.25 ---292.25 - 3975.00
    4 ---- 39.75 ---289.75 - 3725.00
    5 ---- 37.25 ---287.25 - 3475.00

    etc

    Since the monthly payment varies and is the total of
    250 + interest, the monthly balance is reduced by exactly $250 , and it will take 20 months to pay it off.
    This is not a usual procedure, the payments usually are the same for each month, and the calculations do not fit into one of the four basic compound interest formulas.

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. Finance

    You have arranged for a loan on your new car that will require the first payment today. The loan is for $32,000, and the monthly payments are $620. Required: If the loan will be paid off over the next 60 months, what is the APR of

  2. Math

    Study ways of raising a loan to buy a car or house e.g. bank loan or purchase a refrigerator or a television set through hire purchase the

  3. Math

    Kevin is trying to determine whether to lease or purchase a car. The purchase price is $42,000 and he has been approved for a 4- year loan with a 5.75% interest rate. He assumes the car's value will depreciate 8% each year, and he

  4. finance

    You borrow $149,000 to buy a house. The mortgage rate is 7.5 percent and the loan period is 30 years. Payments are made monthly. If you pay for the house according to the loan agreement, how much total interest will you pay?

  1. Math/Finance

    Jasmine is taking out a small business loan for her floral shop. She plans to apply for a $30,000 loan with a 5-year term and a 3.75% interest rate. She is unsure of her expected monthly profits, so she wants to know the benefit

  2. math

    Leslie has been offered the choice of either a $1,000 rebate or a 5.5 percent, 48-month loan for the new car she is purchasing. If Leslie will be financing $15,000 and she can get a 7.5 percent, 48-month loan at her credit union,

  3. Finance

    You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 38-year mortgage loan for 70 percent of the $3,380,000 purchase price. The monthly payment on this loan will be $17,100. What is the APR on

  4. Finance

    Victor would like to buy his first car and the one he has his eye on is $25,000 plus an extra 13% HST for a total price of $28,250. The dealership has a deal for 0% down payment and charges 2.89% interest on the loan. Victor plans

  1. MATH

    Jasmine is taking out a small business loan for her floral shop. She plans to apply for a $30,000 loan with a 5-year term and a 3.75% interest rate. She is unsure of her expected monthly profits, so she wants to know the benefit

  2. finance

    Kohers Inc is considering a leasing arrangement to finance some manufacturing tools that it needs for the next 3 years. The tools will be obsolete and worthless after 3 years. The firm will depreciate the cost of the tools on a

  3. Finance

    After deciding to buy a new car, you can either lease the car or purchase it on a 3-year loan. The car costs $32,000. The lease offer is for $450/month for 36 months, with only $99 due up front. If you buy the car with a 3-year

  4. Finance

    You are interested in a new Ford Taurus. After visiting your Ford dealer, doing your research on the best leases available, you have three options. (i) Purchase the car for cash and receive a $1,900 cash rebate from Dealer A. The

You can view more similar questions or ask a new question.