Your company has just taken out a 5-year installment loan for $600,000 at a nominal rate...

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Finance

Your company has just taken out a 5-year installment loan for$600,000 at a nominal rate of 12.0% but with equalend-of-month payments.
How much will you still owe after Year 3?
How much total interests will you pay during the first twoyears?
How much principal will you pay off during Year 4?

Answer & Explanation Solved by verified expert

3.6 Ratings (333 Votes)

We are given the following informationr1200n5frequency12PV 60000000Frequency is 12 because we have monthly paymentsWe need to solve the following equation to arrive at the monthlyPMTNext we create the following table for the 5 yearsYearOpening BalanceLoanPMTInterestPrincipal repaymentClosing Balance0 60000000 600000001 60000000 1334667 600000 734667 592653332 59265333 1334667 592653 742014 585233203 58523320 1334667 585233 749434 577738864 57773886 1334667 577739 756928 570169585 57016958 1334667 570170 764497 562524616 56252461 1334667 562525 772142 554803187 55480318 1334667 554803 779864 547004558 54700455 1334667 547005 787662 539127929 53912792 1334667 539128 795539 5311725310 53117253 1334667 531173 803494 5231375911 52313759 1334667 523138 See Answer

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