Coby buys 10 Tufflift 4-post, 4.5-tonne car hoists for his car park at a total cost of $410 000. He finances this with a five-year loan at 6.2% APR with monthly payments. After he has made the first 20 payments, how much is the outstanding principal balance on his loan?

Question

Quizplus · Accepted Answer

The total cost of the hoists is $410 000, so the loan amount is also $410 000.

We can calculate the monthly payment using the PMT function in Excel or a financial calculator:

PMT(6.2%/12, 5*12, 410000) = $7,981.66

After 20 payments, the number of payments remaining is:

5*12 - 20 = 220

We can use the remaining number of payments and the monthly payment to calculate the outstanding principal balance using the PV function:

PV(6.2%/12, 220, 7981.66, 0, 1) = $287,153.25

Therefore, the answer is (C) $287,153.

Coby Buys 10 Tufflift 4-Post, 4