What is the outstanding balance of the loan after 6 years (12 payments)?

Question

Quizplus · Accepted Answer

Using the formula for the remaining balance of a loan after a specified number of payments, we get:

Remaining balance = (original loan amount) x (1 + r)^n - [(PMT) x (((1 + r)^n - 1)/r)]

where r is the monthly interest rate (0.01), n is the number of payments (12), and PMT is the monthly payment (500).

Plugging in the values, we get:

Remaining balance = (10000) x (1 + 0.01)^12 - [(500) x (((1 + 0.01)^12 - 1)/0.01)]
= 7842.95

Therefore, the outstanding balance of the loan after 6 years (12 payments) is $7842.95.

What Is the Outstanding Balance of the Loan After 6