Wade Ellis buys a car for 1278049 He puts 10 down and obtain

Wade Ellis buys a car for $12,780.49. He puts 10% down and obtains a simple interest amortized loan for the balance at 12 and 1/2% interest for four years. After three years and two months of making the minimum monthly payment, he sells his car. Find the unpaid balance on his loan. (Round all intermediate calculations to the nearest cent. Round the answer to the nearest cent.)

Solution

Calculation of Monthly Installment Monthly Payment = P (r(1+r)^n)/((1+r)^n-1) Monthly Payment = 12,780.49 X (1.04%(1+1.04%)^48)/((1+1.04)^48-1) Monthly Payment = $339.71 Amount Unpaid after payment of 38 Payments FV = PV (1 + r)^n - P [((1 + r)^n - 1) / r] FV = 12,780.49 (1 + 1.04%)^38 - 339.71[(1 + 1.04%)^38 - 1) / 1.04%] FV = $3210.06 = Unpaid Balance on Loan