1. Mary Smith took a car loan of $20,000 to make 60 equal monthly payments. The interest compounds monthly. (a) Calculate the monthly payment for Mary, if the nominal interest is 9% per year. (b) (How much interest would Mary pay for taking the loan? (c) Immediately after making the 20th payment, if she wants to pay off the car loan, how much does she need to pay?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
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1. Mary Smith took a car loan of $20,000 to make 60 equal monthly payments. The interest compounds monthly.

(a) Calculate the monthly payment for Mary, if the nominal interest is 9% per year.
(b) (How much interest would Mary pay for taking the loan?

(c) Immediately after making the 20th payment, if she wants to pay off the car loan, how much does she need to pay?

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