Question

You are to repay a loan of $3800.00 with 19 monthly repayments of $210.00, with the first repayment being one month after you took out the loan. Interest is charged at j12 = 8.1510% p.a. One month after the last payment of $210.00 you make a partial payment to finish paying off the loan. The size of the partial payment is: O 1) $78.55 O 2) $68.60 O 3) $78.02 O | 4) $78.38

Answer 1

The size of the partial payment to finish paying off the loan is $0.00.

Step-by-step explanation:

To find the size of the partial payment to finish paying off the loan, we need to calculate the remaining balance after making 19 monthly repayments of $210.00.

The remaining balance can be calculated using the formula:

Remaining Balance = Total Loan Amount - Total Monthly Repayments

Remaining Balance = $3800.00 - ($210.00 x 19)

Remaining Balance = $3800.00 - $3990.00

Remaining Balance = -$190.00

Since the remaining balance is negative, it means that the loan has already been fully paid off after the 19 monthly repayments.

Therefore, the size of the partial payment to finish paying off the loan is $0.00.

Answer 2

From the amortization table that was added to the solution, the size of the partial loan is given as 78.02

How to solve for the size of the loan

To find the size of the partial payment to finish paying off the loan, we can use the formula for the present value of an annuity.

The total loan amount is the present value of the regular payments plus the present value of the final partial payment.

The amortization was solved using a spreedsheet. The partial payment is solved to be 78.02 dollars