Question

A borrower had a loan of $60,000 at 5% compounded annually, with 7 annual payments. Suppose the borrower paid off the loan after 4 years. Calculate the amount needed to pay off the loan.

The amount needed to pay off this loan after 4 years is $____?

Answer 1

Loan amount = $60,000

Calculating the Outstanding loan balance after 4 years:-

Where, P = Loan amount = $60,000

r = Periodic Interest rate = 5%

n= no of periods of loan = 7 years

m = no of years of payment already made = 4 years

Outstanding balance = $28,237.87

So, The amount needed to pay off this loan after 4 years is $28,237.87

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