Question

You borrow $25,000 from your local credit union at 12 percent compounded monthly. You repay the loan by making equal monthly payments over the next four years. What is the remaining balance after the 37th payment?

Answer 1

$8,696.5625

Step-by-step explanation:

A=P(1+r/n)^nt

P=$25,000

r=0.12

n=12

t=4

A=$25,000(1+0.12/12)^12*4

=$25,000(1+0.01)^48

=$25,000(1.01)^48

=$25,000(1.6122)

=$40,305

$40,305/48months=$8396.875/month

$8396.875×37 months=$31,068.4375

Therefore, Balance=$40,305-$31,068.4375

=$8,696.5625