Upon graduation, Jeffrey Feldhusen borrows $15,000 to finance a late model used car. The loan is made by a family member who wishes to have equal annual payments at 9 percent over 4 years.

a. How much are the annual payments?

b. How many total dollars of interest does Jeffrey pay over the life of the loan?

c. How much of the second payment goes to pay interest?

d. How much of the second payment goes to pay principal?

e. Develop a table similar to that of Table 3.7. Do your answers to Parts a, c, and d agree?

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TABLE 3.7 A (P|F 15%,5-1+1) I, IPMT P PPMT 1 $2,983.16 0.4972 $1,499.93 $1,500.00 $1,483.23 $1,483.16 $2,983.16 0.5718 $1.277.39 $1,277.53 $1,705.77 $1,705.63 3 $2,983.16 0.6575 $1,021.73 $1,021.68 $1,961.43 $1,961.47 $2,983.16 0.7561 $727.59 $727.46 $2,255.57 $2,255.69 5 $2,983.16 0.8696 $389.00 $389.11 $2,594.16 $2,594.05