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Ross purchased a new commercial vehicle today for $25,000. the entire amount was financed using a five-year loan with a 4 percent interest rate (compounded monthly). how much will ross owe on his vehicle loan after making payments for three years?

Respuesta :

Answer:

$28,121

Explanation:

The formula for compound interest is A=P(1+r/100)t, (t) is in the exponent.

P=25,000

r=4

t=3

Once we input the values it will be: A=25000(1+4/100)3

And so our answer is $28,121

P.S The reason we are using compound interest formula is bcz the said (compounded monthly)

The amount of owed amount after making payment for three years should be $10,602.44.

Calculation of the owed amount:

Since

Cost of vehicle = $25,000

Annual interest rate = 4%

Monthly interest rate = 0.33333%

Period = 5 years or 60 months

First calculate the monthly payment.

I = 0.33333%

N = 60

PV = -25000

FV = 0

So, it is PMT = 460.41

Now the loan outstanding.

I = 0.33333%

N = 24

PMT = 460.41

FV = 0

So, PV = -10602.44

Learn more about interest rate here; https://brainly.com/question/23947647

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