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31 March, 18:12

Marques owes 32 more payments on a loan that was originally a $20,000 5-year 6% apr loan with monthly payments. how much is his outstanding principal balance?

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  1. 31 March, 18:17
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    Calculate the value, A, of the original loan.

    A = 20000 * (1 + 0.06/12) ⁶⁰ = $26,977.00

    Calculate the monthly payment

    p = 26977/60 = $449.62

    After 32 payments, the remaining value of the loan is

    26977 - 32*449.62 = $12,589.27

    The number of remaining payments is 60-32 = 28.

    If x = the outstanding principal balance, then

    x * (1 + 0.06/12) ²⁸ = 12589.27

    1.15x = 12.589.27

    x = 10947.19

    Answer: The outstanding principal balance is $10,947.19
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