Question = (1 point) Carl borrows $5500 to be repaid with quarterly payments over 12 years at j4 = 4.5%. Carl made the first 2 payments and then missed 3 payments in a row. What new quarterly payments must he make to repay the loan under the original term? Answer: $ NOTE: When calculating a payment, round appropriately and carry that value through further calculations.
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Transcribed Image Text: = (1 point) Carl borrows $5500 to be repaid with quarterly payments over 12 years at j4 = 4.5%. Carl made the first 2 payments and then missed 3 payments in a row. What new quarterly payments must he make to repay the loan under the original term? Answer: $ NOTE: When calculating a payment, round appropriately and carry that value through further calculations.
More Transcribed Image Text: = (1 point) Carl borrows $5500 to be repaid with quarterly payments over 12 years at j4 = 4.5%. Carl made the first 2 payments and then missed 3 payments in a row. What new quarterly payments must he make to repay the loan under the original term? Answer: $ NOTE: When calculating a payment, round appropriately and carry that value through further calculations.
Community Answer
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Step 1 - Quarterly Payment Loan Amount = 5500 Period n = 12 years or 48 quarters Rate r = 4.5%pa or 1.125% per quarter Now to find quarterly payment A we will use below formula Loan Amount = A × Annuity(r,n) Loan Amount = A ((1-(1+r)^-n)/r) 5500 =A×((1-(1+0.01125)^-48)/0.01125) 5500 = A × 36.93 A = 5500 / 36.93 A = 148.92 Therefore quarterly payment will be 148.92 Step 2 - Outstanding balance Outstanding balance of Loan is equal to the present value of remaining payments. quarterly payment A = 1,249.31 Rate r = 4.5%pa or 1.125% per quarter Remaining payments n = 48 - 2 = 46 payment Now balance of loan will be Loan balance = [A × Annuity(r,n)] Loan balance = A× [(1-((1+r)^-n))/r] Lo ... See the full answer