Answered: Mary Smith took a car loan of $25,000…

Mary Smith took a car loan of $25,000 to pay back in 72 monthly installments at an interest rate of 12%. Compute the loan balance immediately after the 48th payment.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Mary Smith took a car loan of $25,000 to pay back in 72 monthly installments at an interest rate of
12%.
Compute the loan balance immediately after the 48th payment.
$18,560
$8,132
$10,383
$12,500

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