Question

Assume you borrow $50,000 at 10% per year in- terest and you agree to repay the loan in five equal annual payments. What is the amount of the unre- covered balance immediately after you make the third payment? both excel and hand solutions , please capture the excel solution.

Answer #1

Loa amount = 50000

Loan interest rate = 10%

loan term = 5 yrs

annual loan payments = 50000*(A/P,10%,5) = 50000*0.263797 = 13189.87

No of Payment left after third payment = 5 - 3 = 2

Principal left to be paid = 13189.87 * (P/A,10%,2) = 13189.87 *
1.735537 = **22891.51**

**Excel solution**

interest rate | 10% |

Loan term (yrs) | 5 |

Loan amount | 50000 |

Annual payment | 13,189.87 |

No. Of payments left after 3rd payment | 2 |

Principal Due after 3rd payment |
22,891.52 |

Showing formula in excel

interest rate | 0.1 |

Loan term (yrs) | 5 |

Loan amount | 50000 |

Annual payment | =PMT(G33,G34,-G35) |

No. Of payments left after 3rd payment | =G34-3 |

Principal Due after 3rd payment | =PV(G33,G37,-G36) |

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