The balance on a car loan after 4 years is $8,996.32. The interest rate is 5.6% compounding annually. What was the initial value of the loan?

To evaluate the initial value we use the formula: A=P(1+r)^n where A=future value P=principle amount r=rate n=time thus plugging in our values we get: 8996.32=P(1+5.6/100)^4 solving for p we shall have: 8996.32=1.2435P hence: P=$7234.5 Thus the initial amount was $7234.5

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anthougo anthougo · Answer 2 · 2022-06-02T12:38:58+02:00

The initial value (present value) of the loan with a balance of $8,996.32 after 4 years at 5.6% is $7,234.51.

What is the present value?

The present value of an asset or investment is the initial value when the investment is made.

The present value can be determined using an online finance calculator or the PV table, which is a discounting method.

Data and Calculations:

N (# of periods) = 4 years

I/Y (Interest per year) = 5.6%

PMT (Periodic Payment) = $0

FV (Future Value) = $8,996.32

Results:

PV = $7,234.51

Total Interest $1,761.81

Thus, the initial value (present value) of the loan with a balance of $8,996.32 after 4 years at 5.6% is $7,234.51.

Learn more about determining the present value at https://brainly.com/question/15904086

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