Loan Balance Hank purchased a $20,000 car two years ago using an 8 percent,5-year loan.He has decided that he would sell the car now,if he could get a price that would pay off the balance of his loan.What is the minimum price Hank would need to receive for his car?

Question

Quizplus · Accepted Answer

Using the amortization formula, we can find that the current loan balance for Hank is $12,941.12. This means that he needs to sell his car for at least that amount in order to pay off the loan completely. Therefore, the minimum price Hank would need to receive for his car is $12,941.12.

The other answer choices are incorrect because they do not reflect the current loan balance and/or interest rate.

Loan Balance Hank Purchased a $20,000 Car Two Years Ago