Derek must give the bank an amount equal to the remaining principal on the loan
The total principal paid off after 11 months is calculated using CUMPRINC function in Excel :
rate = 6.31% / 12 (converting annual rate into monthly rate)
nper = 72 (total monthly payments = 6 years * 12 months per year = 72)
pv = 30145 (beginning principal)
start period = 1 (we are calculating total principal paid off between 1 and 11 months)
end period = 11 (we are calculating total principal paid off between 1 and 11 months)
type = 0 (each payment is made at the end of month)
CUMPRINC is calculated to be $3,902.02.
Balance principal remaining on loan = $30,145 - $3,902.02 = $26,242.98
The amount to pay the bank is $26,242.98
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