If you borrow $40,000 today and agree to repay the loan in 24
annual payments, how...
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Finance
If you borrow $40,000 today and agree to repay the loan in 24annual payments, how much do you owe every year? Assume this is anamortized loan with 10% interest rate, compounded annually?
Answer & Explanation
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4.2 Ratings (586 Votes)
Loan amount =
40000
Interest rate annual= 10% or
0.1
Time in years (n)=
24
Equal annual payments for loan formula = P* i
*((1+i)^n)/((1+i)^n-1)
40000*0.10*((1+0.10)^24)/(((1+0.10)^24)-1)
$4,451.99
Amount owed every year shall be $ 4451.99
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Loan amortization table
Year
Beginning balance
Annual Payment
Interest @10%
Principal payment received
Ending balance
(Beg. Bal.*8%)
(Payment - interest)
(Beg. Balance - Loan red.)
1
40000.00
4451.99
4000.00
451.99
39548.01
2
39548.01
4451.99
3954.80
497.19
39050.82
3
39050.82
4451.99
3905.08
546.91
38503.91
4
38503.91
4451.99
3850.39
601.60
37902.31
5
37902.31
4451.99
3790.23
661.76
37240.55
6
37240.55
4451.99
3724.05
727.94
36512.61
7
36512.61
4451.99
3651.26
800.73
35711.88
8
35711.88
4451.99
3571.19
880.80
34831.08
9
34831.08
4451.99
3483.11
968.88
33862.20
10
33862.20
4451.99
3386.22
1065.77
32796.43
11
32796.43
4451.99
3279.64
1172.35
31624.08
12
31624.08
4451.99
3162.41
1289.58
30334.50
13
30334.50
4451.99
3033.45
1418.54
28915.95
14
28915.95
4451.99
2891.60
1560.40
27355.56
15
27355.56
4451.99
2735.56
1716.44
25639.12
16
25639.12
4451.99
2563.91
1888.08
23751.04
17
23751.04
4451.99
2375.10
2076.89
21674.16
18
21674.16
4451.99
2167.42
2284.58
19389.58
19
19389.58
4451.99
1938.96
2513.03
16876.55
20
16876.55
4451.99
1687.65
2764.34
14112.21
21
14112.21
4451.99
1411.22
3040.77
11071.44
22
11071.44
4451.99
1107.14
3344.85
7726.60
23
7726.60
4451.99
772.66
3679.33
4047.26
24
4047.26
4451.99
404.73
4047.26
0.00
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