When Teresa opened her law office, she bought 14000 worth of books and 7200 dollars worth of office furniture. She paid $1200 down and agreed to amortize the balance with semiannual payments for 5 years at 12% compounded semiannually. Find the ammount of each payment.
After 30 months flora received a large tax refund and decided to pay off the loan. What is the remaining balance on her loan?
debt to be financed = 14000+7200-1200 = 20000
i = .12/2 = .06
n = 10
payment = P
20000= P(1 - 1.06^-10)/.06
P = 2717.36
After 30 months or 5 interest periods of 6 months
amount of her payment
= 2717.36(1.06^5 - 1)/.06 = 15318.01
Value of the original 20000 at that time spot
= 20000(1.06)^5 = 26764.51
So the balance she had to pay off
= 26764.51 - 15318.01 = 11446.50