A company borrows $100,000 with interest at j₁₂ = 9%.The loan is to be amortized by 88 monthly payments of $1550,plus a final smaller payment.What is the outstanding balance after 40 payments have been made?

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To find the outstanding balance after 40 payments, we use the formula for the remaining balance of an amortizing loan, which involves calculating the present value of the remaining payments. Given an interest rate of 9% per annum, monthly interest rate is 0.09/12. The loan is initially $100,000, with monthly payments of $1550 for 88 months. After 40 payments, there are 48 payments left. The formula for the remaining balance (B) after n payments is B = P[(1 + i)^n - (1 + i)^p] / i, where P is the payment, i is the monthly interest rate, and p is the number of payments made. Plugging in the values, we calculate the outstanding balance after 40 payments, which matches closest to option B, $62,842.79.

A Company Borrows $100,000 with Interest at J12 = 9

A Company Borrows $100,000 with Interest at J₁₂ = 9