Question

# Assume you borrow \$50,000 at 10% per year in- terest and you agree to repay the...

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.

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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