Q. John is planning to buy a car worth £25,000. He has no savings and will fund the entire amount by taking out a loan from his bank. The bank has proposed that it will lend the money to John at an 8% annual rate. The entire loan must be paid back in 4 years with equal monthly instalments. Calculate the principal and interest values for the third payment.

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First we will calculate monthly payment and then balance principal outstanding at 2nd mont... View the full answer