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You have recently finished your MBA at the DarnIt Business School. Naturally, you must purchase a...

You have recently finished your MBA at the DarnIt Business School. Naturally, you must purchase a new BMW immediately. The car costs about $21,000. The bank quotes an interest rate of 15% APR for a 72 month loan with a 10 percent down payment. You plan on trading the car in for a new one in two years.

1)What will the loan balance be when you trade in the car?

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Answer #1

Car Cost = $ 21000

Down Payment @10% = $ 2100

Loan Amount = Cost - Down Payment

= $ 21000 - $ 2100

= $ 18900

EMI = Loan / PVAF(r%, n)

= $ 18900 / PVAF (0.8333%,72)

= $ 18900 / 53.9787

= $ 350.14

Monthly payment is $ 350.14

Loan Amortization:

Month Opening Bal Instralment Int Principal Repay Closing Bal
1 18900 350.14 157.5 192.64 18707.36
2 18707.36 350.14 155.8947 194.2453 18513.11
3 18513.11 350.14 154.276 195.864 18317.25
4 18317.25 350.14 152.6438 197.4962 18119.75
5 18119.75 350.14 150.998 199.142 17920.61
6 17920.61 350.14 149.3384 200.8016 17719.81
7 17719.81 350.14 147.6651 202.4749 17517.34
8 17517.34 350.14 145.9778 204.1622 17313.17
9 17313.17 350.14 144.2764 205.8636 17107.31
10 17107.31 350.14 142.5609 207.5791 16899.73
11 16899.73 350.14 140.8311 209.3089 16690.42
12 16690.42 350.14 139.0869 211.0531 16479.37
13 16479.37 350.14 137.3281 212.8119 16266.56
14 16266.56 350.14 135.5546 214.5854 16051.97
15 16051.97 350.14 133.7664 216.3736 15835.6
16 15835.6 350.14 131.9633 218.1767 15617.42
17 15617.42 350.14 130.1452 219.9948 15397.43
18 15397.43 350.14 128.3119 221.8281 15175.6
19 15175.6 350.14 126.4633 223.6767 14951.92
20 14951.92 350.14 124.5993 225.5407 14726.38
21 14726.38 350.14 122.7198 227.4202 14498.96
22 14498.96 350.14 120.8247 229.3153 14269.65
23 14269.65 350.14 118.9137 231.2263 14038.42
24 14038.42 350.14 116.9868 233.1532 13805.27

Balance left after 2 Years in Loan Account is $ 13,805.27

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