Question

1. You want to buy a car, and a local bank will lend you $25,000 to be repaid monthly over 5 years at an APR of 4%. What is the total amount of interest paid during the first two months?

Answer 1

Ans $ 165.41

	P =	Regular Payments
	PV =	Loan Amount
	r =	rate of interest
	n =	no of periods
	P =	r (PV)
		1 - (1 + r )-n
	P =	(4%/12)*25000
		1 - (1 / (1 + 4%/12)^60))
	P =	83.33333333
		0.180996896
	P =	460.41
	INTEREST IN FIRST 2 YEARS =	83.33 + 82.08
		165.41
	Beginning Balance	Interest	Principal	Ending Balance
1	$25,000.00	$83.33	$377.08	$24,622.92
2	$24,622.92	$82.08	$378.34	$24,244.58