Question 1170485: A man borrowed $15,000 three years ago. The terms of loan are 10% interest for 10 years with uniform annual payments. He just made his second annual payment. How much principal does he still owe?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! present value = 15,000
future value = 0
number of time periods = 10
interest rate per time period = 10%
payment made at the end of each time period.
click on pmt to get 2,441.18 at the end of each year.
analyze that for 8 remaining years with payment of 2441.18 at the end of each yer to get present value of 11,884.69.
that's the remaining balance at the end of 3 years.
the loan is 15,000
at the end of the first year, his remaining balance is 15,000 * 1.10 - 2441.18 = 14058.82.
at the end of the second year, his remaining balance is 14058.82 * 1.10 - 2441.18 = 13023.52
the end of the second year is the beginning of the third year, so that's his remaining balance at the beginning of the third year.
his remaining balance is what he still owes right after he made his second annual payment.
here are displays of the results of the calculator used.
in the first one, inputs are all fields except the payment field.
you are looking for the payment amount at the end of each year.
in the second one, inputs are all fields except the present value field.
you are looking for the present value with payments calculated from the first one.
the first one is for 10 years.
the second one is for 8 remaining years right after making the second payment.
the calculator used id found at https://arachnoid.com/finance/index.html
let me know if you have any questions regarding this.
theo
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