Shelby takes out a loan to buy a Mustang GT. The loan is for $23,000. Her interest rate is 4.5% and is compounded monthly. She makes a monthly payment of $550.

Question

What is the account balance after 6 months?

Answer 1

Balance = 23000(1+0.045/12)^t -550t for t in months. At 6 months, t=6:

Balance = 23000(1.00375)^6 -550(6) = $20,222.38