1. The loan balance after 2 years is $45,262.
2. The loan balance after 3 years is $42,678.
3. The loan balance after 1 year is $47,700.
What is the loan balance?
The loan balance is the amount remaining from the principal amount after the deduction of repayment and the addition of interest for the period.
The loan balance can be computed manually as below:
Data and Calculations:
Loan amount = $50,000
Interest rate = 6%
Annual repayments = $5,000
1st year:
Loan amount = $50,000
Repayment = ($5,000)
Interest = $2,700 ($50,000 - $5,000) x 6%
Loan balance = $47,700 ($50,000 - $5,000 + $2,700)
2nd year:
Loan balance = $47,700
Repayment = ($5,000)
Interest = $2,562 ($47,700 - $5,000) x 6%
Loan balance = $45,262 ($47,700 - $5,000 + $2,562)
3rd year:
Loan balance = $45,262
Repayment = ($5,000)
Interest = $2,416 ($45,262 - $5,000) x 6%
Loan balance = $42,678 ($45,262 - $5,000 + $2,416)
Thus, the loan balance after 3 years is $42,678.
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