A truck costing $112,000 is paid off in monthly installments over four years with 8% APR.After three years the owner wishes to sell the truck.What is the closest amount from the following list that he needs to pay on his loan before he can sell the truck?

Question

Quizplus · Accepted Answer

The amount of the loan after three years is $112,000 * (1 + 0.08)^3 = $135,132. The amount of the loan paid off after three years is $112,000 * (1 - (1 + 0.08)^-3) = $80,694. The amount of the loan still owed after three years is $135,132 - $80,694 = $54,438. The closest amount from the list that the owner needs to pay on his loan before he can sell the truck is $31,432.

A Truck Costing $112,000 Is Paid Off in Monthly Installments