Suppose you take out a 11000 fifteen year interest only loan

Suppose you take out a $11000, fifteen year, interest only loan at 7% per year, compounded monthly. What is the balance remaining after you have made 98 payments?

Solution

Interest Rate = 7%

A = P(1+r/12)^(12t)

A = 11000(1+0.07/12)^(12*15)

A = 11000(1+0.0058333333)^(180)

A = 31338.4140$

Amount paid in each monthly installment will be 31338.40$/180 = 174.102$

Balance remaining after 98 installments = 31338.4140$ - 174.102*98 = $14276.38