Question

# Amy takes out a loan for \$5000 with 5.25% compounded monthly today, and plans on paying...

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.

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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