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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