# Question Peter takes out a loan of \$12000 at j4 = 4%, to be repaid with quarterly payments of \$290. What is the outstanding balance of the loan just before the 26th payment is made?

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Transcribed Image Text: Peter takes out a loan of \$12000 at j4 = 4%, to be repaid with quarterly payments of \$290. What is the outstanding balance of the loan just before the 26th payment is made?
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Transcribed Image Text: Peter takes out a loan of \$12000 at j4 = 4%, to be repaid with quarterly payments of \$290. What is the outstanding balance of the loan just before the 26th payment is made?
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TD8CEZ

Loan Amount = \$12,000 Quarterly Payments = \$290 To know the&#160;Outstanding Balance just before the 26th payment, we first calculate the&#160;Outstanding Balance after 25th payment&#160; - Calculating the Outstanding Balance after 25th payment:- Outstanding Balance =P**(1+r)^(n)-C**([(1+r)^(n)-1])/(r) Where, C= Periodic Payments = \$290 r = Periodic Interest rate = 4%/4 = 1% n= no of periods = 25 P = Loan AMount = \$12,000 Outstanding Balance =12,000**(1+0.01)^(25)-290**([(1+0.01)^(25)-1])/(0.01) Outstanding Balance =12 ... See the full answer