Question

Use an Excel worksheet to answer the following five car loan problems you borrowed money from...

Use an Excel worksheet to answer the following five car loan problems

you borrowed money from your local bank to purchase a car. The bank requires you to repay the loan over 48 months and charges a fixed, annual interest rate of 6 percent. The amount of your loan is \$25,000

a,How much will your loan payment be each month?

b,How much of the first loan payment will go toward principal?

c,How much interest will you pay during the 1st year of the loan (the first 12 payments)?

d,What will your loan balance be after the 24th payment?

e,How much will you pay in interest during the last year of the loan (payments 37-48)?

a.

How much will your loan payment be each month

b.

How much of the first loan payment will go toward principal=587.13-25000*(6%/12)=462.13

c.

loan value at the end of 12 months=587.13*((1-(1+(6%/12))^(-36))/(6%/12))=19299.56

principal paid in first year=25000-19299.56=5700.44

How much interest will you pay during the 1st year of the loan (the first 12 payments)=587.13*12-5700.44=1345.12

d.

What will your loan balance be after the 24th payment=587.13*((1-(1+(6%/12))^(-24))/(6%/12))=13247.34

e.

loan value after 36 months=587.13*((1-(1+(6%/12))^(-12))/(6%/12))=6821.82

so principal paid in the last year =6821.82

How much will you pay in interest during the last year of the loan (payments 37-48)=587.13*12-6821.82=223.74

the above are answer