Concept explainers
An Amortization Table Suppose you borrow P dollars at a monthly interest rate of r (as a decimal) and wish to pay off the loan in t months. Then your monthly payment can be calculated using
Remember that for monthly compounding, you get the monthly rate by dividing the APR by 12. Suppose you borrow $3500 at a 9% APR (meaning that you use r = 0.09/12 in the preceding formula) and pay it back in 2 years.
a. What is your monthly payment?
b. Let’s look ahead to the time when the loan is paid off.
i. What is the total amount you paid to the bank?
ii. How much of that was interest?
c. The amount B that you still owe the bank after making k monthly payments can be calculated using the variables r, P, and t. The relationship is given by
i. How much do you still owe the bank after 1 year of payments?
ii. An amortization table is a table that shows how much you still owe the bank after each payment. Make an amortization table for this loan.
Want to see the full answer?
Check out a sample textbook solutionChapter 2 Solutions
Functions and Change: A Modeling Approach to College Algebra (MindTap Course List)
Additional Math Textbook Solutions
Intermediate Algebra
College Algebra (6th Edition)
High School Math 2012 Common-core Algebra 1 Practice And Problem Solvingworkbook Grade 8/9
Elementary Linear Algebra (Classic Version) (2nd Edition) (Pearson Modern Classics for Advanced Mathematics Series)
College Algebra in Context with Applications for the Managerial, Life, and Social Sciences (5th Edition)
- College Algebra (MindTap Course List)AlgebraISBN:9781305652231Author:R. David Gustafson, Jeff HughesPublisher:Cengage LearningGlencoe Algebra 1, Student Edition, 9780079039897...AlgebraISBN:9780079039897Author:CarterPublisher:McGraw Hill