Jimmie wishes to buy a new car that will cost $29,000.
a. How much will his monthly car payments be if he obtains a loan that is amortized over 60 months, and the nominal interest rate is 8.5 percent per year with monthly compounding?
b. Create an amortization schedule for Jimmie’s car loan. What portion of the first monthly payment goes toward repaying the principal amount of the loan? What portion of the last monthly payment goes toward the principal?
c. Using the amortization schedule, determine how much Jimmie still owes on the car loan after three years of payments on the five-year loan. What is the present value of this amount?