Asked by Kayelyn Rooney on May 27, 2024
Verified
A home improvement loan is to be repaid by equal monthly payments for six years. The interest rate is 5.4% compounded monthly and the amount borrowed is $33,500. How much will the borrower still owe after four years?
A) $12,389
B) $11,167
C) $31,909
D) $23,675
E) $18,660
Amortized
Refers to the process of gradually reducing debt through regular payments that cover both interest and principal over a set period.
- Ascertain the unpaid balance of a loan subsequent to a definite period of repayments.
Verified Answer
GS
Gurpreet SinghMay 28, 2024
Final Answer :
A
Explanation :
The borrower will still owe $12,389 after four years. This can be calculated using the formula for the remaining balance of an amortizing loan, which takes into account the total loan amount, the interest rate, the total number of payments, and the number of payments already made.
Learning Objectives
- Ascertain the unpaid balance of a loan subsequent to a definite period of repayments.
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