Question

You borrow $10,000 to build an extra bedroom onto your house. The loan is secured for 7 years at an annual interest rate of 11.5%. The monthly payment is $173.86. a. Find the balance after the fourth payment. $ b. Find the amount of the last payment.

Answer 1

Answer:

balance after 4th payment $9684.05

balance after 85th payment $14.37

Explanation:

given data      

borrow = $10,000

time = 7 year

annual interest rate = 11.5%

monthly payment  = $173.86

solution

we know monthly interest will be here = $\frac{0.115}{12}$ = 0.0096

so here

balance after payment will be here

an = 1.0096 an-1  - 173.86     ........1

here 1.0096  is monthly interest

and monthly payment is subtract here

and an-1 is balance before payment

and an is balance after

so that

payment number                      balance after payment

1                                                  9922.14

2                                                  9843.53

3                                                  9764.17

4                                                   9684.05

.....                                                  ........

83                                                  186.3

84                                                   14.23

85                                                    -159.49

so that balance after 4th payment will be = $9684.05

and balance after 85 payment is 173.86 - 159.49 = 14.37