Question

Amy takes out a loan for $5000 with 5.25% compounded monthly today, and plans on paying back this loan with a $750 payment made at the end of each month for as long as necessary then a final payment to settle the debt one month after the last full payment. Find the number of full payments necessary and the size of the concluding payment.

Answer #1

**Given Information**

**Loan Amount = $5000/-**

Interest Rate = 5.25%

Monthly Reayment = $750/-

Month |
Beginning
Balance |
[email protected]% |
Monthly
Payment |
Principal |
Ending Balance |

1 | 5000 | 22 | 750 | 728 | 4272 |

2 | 4272 | 19 | 750 | 731 | 3541 |

3 | 3541 | 15 | 750 | 735 | 2806 |

4 | 2806 | 12 | 750 | 738 | 2068 |

5 | 2068 | 9 | 750 | 741 | 1327 |

6 | 1327 | 6 | 750 | 744 | 583 |

7 | 583 | 3 | 586 | 583 | 0 |

* *Round to the nearest $*

**Amy has to make 6 fully monthly payments.**

**In the 7th month Ending balance would be paid with
interest on it, Therefore concluding payment that he has to do
is**

**=$583(principal)+$3(interest)**

**=$586/-**

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