Quantitative Problem: You need $18,000 to purchase a used car. Your wealthy uncl
ID: 2807751 • Letter: Q
Question
Quantitative Problem: You need $18,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 5 years, with the first payment to be made one year from today. He requires a 7% annual return. What will be your annual loan payments? Round your answer to the nearest cent. Do not round intermediate calculations. $ How much of your first payment will be applied to interest and to principal repayment? Round your answer to the nearest cent. Do not round intermediate calculations. Interest: $ Principal repayment: $
Explanation / Answer
PMT
pv*r / 1-(1+r)^-n
18000*.07 / 1-(1.07)^-5))
1260/.28701
4390.032
Annual payment
4390.032
Amount of interest
18000*7%
1260
amount of principal
4390.032-1260
3130.032
PMT
pv*r / 1-(1+r)^-n
18000*.07 / 1-(1.07)^-5))
1260/.28701
4390.032
Annual payment
4390.032
Amount of interest
18000*7%
1260
amount of principal
4390.032-1260
3130.032