Question

For the past

11

​years, Erin has owned a boutique clothing store. She purchased the store

11

years ago with a 15 year loan of

​$225,000

charging

6.7

annual interst with monthly payments. After making payments for the past

11

​years, she sold the business for​ $450,000 and plans to use funds from the sale to pay off the remainder of her loan. Find the amount needed to pay off​ Erin's loan.

Answer 1

Erin sold the Business for $ 450,000

- Calculating the amount needed to pay off the loan or Oustanding balance amount of loan after making payments for 11 years:

Where, P = Loan Balance = $225,000

r = Periodic Interest rate = 6.7%/12 = 0.55833%

n= no of periods = 15yrs*12 = 180

m = no of periods lapsed = 11yrs*12 = 132

outstanding Balance = $ 83,369.97

So, the amount needed to pay off​ Erin's loan is $ 83,369.97