Question

Joe borrows $14 000 to buy a motorcycle at 14.4%/a compounded monthly for 9/2 years. After 2 years, Joe gets a year-end bonus and makes a one-time payment of $5000 against the outstanding balance of the loan. How much earlier can he pay off the loan because of this payment?

Answer 1

Here is a solution to your problem....

Rate Pricipal = 14.4% per annum Time 2/2 years Interest being compounded monthly. .: Total amount to be paid = $ 14000 (14 hode) 3x12 = $ 26660-95555 to be paid per month = $ 26660.95553 Amount 54 ane - $493.7213991 Amount paid in 2yrs along with a - time payment of $5000 $ (493.7213991 X 24 + 5000) = $ 16849.31358 Number of months left (2/ -2) x 12 = 30 mentes amount to be paid $ (26660.95555 –16849.31358) $ 9811.641472 the remai 9811.64 1972 months 49.3.72 13991 Remaining i Joe will pay maining toan in the = 19.87 28 3109 months = 20 months (approx). Loan (30-20) = 10 months earlier Copproximately i Joe can