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John's Auto Repair just took out a $52,000, 10-year, 8%, FIXED-PRINCIPAL PAYMENT load from the bank....

John's Auto Repair just took out a $52,000, 10-year, 8%, FIXED-PRINCIPAL PAYMENT load from the bank. Payments are made annually. What is the amount of the loan payment in year 5?

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Answer #1

Amount borrowed = $52,000
Period of loan = 10 years
Interest rate = 8%

Annual payment toward principal = Amount borrowed / Period of loan
Annual payment toward principal = $52,000 / 10
Annual payment toward principal = $5,200

Year 5:

Principal Paid = $5,200
Interest Paid = $2,496

Loan Payment = Principal Paid + Interest Paid
Loan Payment = $5,200 + $2,496
Loan Payment = $7,696

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