SOLUTION: A business owner takes on a $10,000 loan to cover expenses. The interest rate on the loan is 6% per year. Each year, the business owner pays $1000 toward the loan. Find the balance
Algebra.Com
Question 1083613: A business owner takes on a $10,000 loan to cover expenses. The interest rate on the loan is 6% per year. Each year, the business owner pays $1000 toward the loan. Find the balance on the loan after the second payment is made (round your answer to the nearest cent).
A) $9,176.00
B) $8,976.05
C) $6,788.08
D) $5,442.78
Answer by jim_thompson5910(35256) (Show Source): You can put this solution on YOUR website!
Answer: Choice A) $9,176.00
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Work Shown:
Year 1:
interest paid = (interest rate in decimal form)*(current balance)
interest paid = (0.06)*(10000)
interest paid = 600
-----------------
principal paid = (payment amount) - (interest paid)
principal paid = (1000) - (600)
principal paid = 400
-----------------
new balance = (old balance) - (principal paid)
new balance = (10000) - (400)
new balance = 9600
----------------------------------------------------------------------
Year 2:
interest paid = (interest rate in decimal form)*(current balance)
interest paid = (0.06)*(9600)
interest paid = 576
-----------------
principal paid = (payment amount) - (interest paid)
principal paid = (1000) - (576)
principal paid = 424
-----------------
new balance = (old balance) - (principal paid)
new balance = (9600) - (424)
new balance = 9176
----------------------------------------------------------------------
Table:
| Year | Interest Paid | Principal Paid | Old Balance | New Balance |
|---|
| 1 | $600 | $400 | $10,000 | $9,600 |
| 2 | $576 | $424 | $9,600 | $9,176 |
RELATED QUESTIONS
A business owner takes on a $8,000 loan to cover expenses. The interest rate on the loan... (answered by jim_thompson5910)
Determine the annual payment on a $15,000 loan that is to be amortized over a four-year... (answered by Theo)
A business has two loans totaling $85,000. One loan has a rate of 6% and the other has a... (answered by ikleyn)
A loan of $ 12,000 is to be repaid within one year with level monthly payments, due at... (answered by Theo,ikleyn)
Solve the following application and show your work.
Business and finance. Ms. Jordan has (answered by tutorcecilia)
Chelsea took out three loans for a total of $79,000 to start an organic orchard. Her... (answered by richwmiller)
Business and finance. Ms. Jordan has been given a loan of $2500 for 1 year. If
the... (answered by checkley75)
26. Business and finance. Ms. Jordan has been given a loan of $2500 for 1 year. If the... (answered by SmurfDude)
Business and finance. Ms. Jordan has been given a loan of $2500 for 1 year. If the... (answered by checkley75)