00:01
Hello, so step one, we define the annual payment.
00:03
We're given that our rate r is 7%, so 0 .07.
00:08
P is 30 ,000, so 30 ,000, and n here is going to be 3.
00:15
So plugging into our formula, we have that the payment pmt is equal to 30 ,000 times 0 .07 times r, all divided by 1 minus the quantity 1 plus 0 .07 to the negative end, so to the negative third power.
00:36
And then we can go ahead and calculate this, and then we calculate the payment, interest rate, repayment of principal, and ending balance for each year.
00:43
So for year one we have the beginning balance of $30 ,000.
00:53
The interest would be $30 ,000 times 0 .07 and then the payment we calculate that right here and then the ending balance would be the beginning amount minus the repayment of principal.
01:15
So we get then, we're calculating the payment, we get that the payment is going to be $11 ,431 .55.
01:26
And then the repayment of principal is this amount, $11 ,431 .55 minus $2 ,100.
01:33
And the repayment of principal is going to be $9 ,331...