document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1083543>Question 1083543</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A business owner takes on a $8,000 loan to cover expenses. The interest rate on the loan is 3% per year. Each year, the business owner pays $500 toward the loan. Find the balance on the loan after the third payment is made (round your answer to the nearest cent).\r<BR>\n" );
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document.write( "A) $7,472.20<BR>\n" );
document.write( "B) $7,196.37<BR>\n" );
document.write( "C) $6,912.26<BR>\n" );
document.write( "D) $7,740.00 </SPAN>\n" );
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document.write( "Answer: <font color=red>Choice B) $7,196.37</font><BR>\n" );
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document.write( "Explanation:\r<BR>\n" );
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document.write( "Let's walk through each of the three years. <BR>\n" );
document.write( "What I'm focused on are three things<BR>\n" );
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document.write( "<li>the interest paid</li><BR>\n" );
document.write( "<li>the principal paid</li><BR>\n" );
document.write( "<li>the remaining balance</li><BR>\n" );
document.write( "</ul><BR>\n" );
document.write( "The most important is the remaining balance as the last remaining balance (for year 3) will be the final answer.\r<BR>\n" );
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document.write( "----------------------------------------------------------------------\r<BR>\n" );
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document.write( "Let's start the walk through. Everything but the interest rate are values in dollars.\r<BR>\n" );
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document.write( "Year 1:<BR>\n" );
document.write( "interest paid = (interest rate in decimal form)*(current balance)<BR>\n" );
document.write( "interest paid = (0.03)*(8000)<BR>\n" );
document.write( "interest paid = 240<BR>\n" );
document.write( "-----------------<BR>\n" );
document.write( "principal paid = (payment amount) - (interest paid)<BR>\n" );
document.write( "principal paid = (500) - (240)<BR>\n" );
document.write( "principal paid = 260<BR>\n" );
document.write( "-----------------<BR>\n" );
document.write( "new balance = (old balance) - (principal paid)<BR>\n" );
document.write( "new balance = (8000) - (260)<BR>\n" );
document.write( "new balance = 7740<BR>\n" );
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document.write( "Year 2:<BR>\n" );
document.write( "interest paid = (interest rate in decimal form)*(current balance)<BR>\n" );
document.write( "interest paid = (0.03)*(7740)<BR>\n" );
document.write( "interest paid = 232.2<BR>\n" );
document.write( "-----------------<BR>\n" );
document.write( "principal paid = (payment amount) - (interest paid)<BR>\n" );
document.write( "principal paid = (500) - (232.2)<BR>\n" );
document.write( "principal paid = 267.8<BR>\n" );
document.write( "-----------------<BR>\n" );
document.write( "new balance = (old balance) - (principal paid)<BR>\n" );
document.write( "new balance = (7740) - (267.8)<BR>\n" );
document.write( "new balance = 7472.2<BR>\n" );
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document.write( "Year 3:<BR>\n" );
document.write( "interest paid = (interest rate in decimal form)*(current balance)<BR>\n" );
document.write( "interest paid = (0.03)*(7472.2)<BR>\n" );
document.write( "interest paid = 224.166<BR>\n" );
document.write( "interest paid = 224.17 <font color=blue>round to the nearest penny</font><BR>\n" );
document.write( "-----------------<BR>\n" );
document.write( "principal paid = (payment amount) - (interest paid)<BR>\n" );
document.write( "principal paid = (500) - (224.17)<BR>\n" );
document.write( "principal paid = 275.83<BR>\n" );
document.write( "-----------------<BR>\n" );
document.write( "new balance = (old balance) - (principal paid)<BR>\n" );
document.write( "new balance = (7472.2) - (275.83)<BR>\n" );
document.write( "new balance = <font color=red>7196.37</font><BR>\n" );
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document.write( "The third payment has been made, so we can stop. <BR>\n" );
document.write( "This is why the answer is <font color=red>$7,196.37</font>\r<BR>\n" );
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document.write( "Extra Info (Optional):\r<BR>\n" );
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document.write( "If you wish, you can create a table such as this one<BR>\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" src = \"https://i.imgur.com/coH3fMg.png\"><BR>\n" );
document.write( "which will display all of the relevant data in a compact format.<BR>\n" );
document.write( "Each of the values in the table can be found above (in the walkthrough). <BR>\n" );
document.write( "Take note how columns B and C add up to the payment ($500)<BR>\n" );
document.write( "The answer is highlighted. <BR>\n" );
document.write( "The table was created with Microsoft Excel but other alternatives (such as the spreadsheet program from OpenOffice or LibreOffice) will get the job done as well.\r<BR>\n" );
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