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The price of a car is ​$24000. You have saved ​20% of the price as a...

The price of a car is ​$24000. You have saved ​20% of the price as a down payment. After the down​ payment, the balance is financed with a ​six-year loan with monthly payments at 9​%. Determine the unpaid balance after three years?

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Answer #1

Information provided:

Price of the car = $24,000

Down payment = 20%*$24,000 = $4,800

Loan = present value (PV)= $24,000 - $4,800 = $19,200

Time (N)= 6 years*12 = 72 months

Monthly interest rate (I/Y)= 9%/12 = 0.75%

The question is solved by first calculating the amount of monthly payment.

Enter the below in a financial calculator to compute the monthly payment:

PV= -19,200

N= 72

I/Y= 0.75

Press the CPT key and PMT to compute the amount of monthly payment.

The value obtained is 346.09.

Thereby, the monthly payment is $346.09.

Unpaid balance after 3 years:

= $19,200 - ($346.09*3*12)

= $19,200 - $12,459.25

= $6,740.76.

In case of any query, kindly comment on the solution.

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