Math Problem Statement
Lenny purchases a car and finances it with a $5,000 amortized loan. The interest rate is 12% and the loan will be totally repaid over the next five years. Lenny owes one payment per year. Construct an amortization table.
Solution
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Math Problem Analysis
Mathematical Concepts
Finance
Loan Amortization
Interest Rates
Time Value of Money
Formulas
Amortization formula: P = (r*PV) / (1 - (1 + r)^-n)
Interest formula: I = P * r
Principal repayment formula: Principal = Total payment - Interest
Theorems
Compound Interest
Loan Amortization Theorem
Suitable Grade Level
Grades 11-12 and College-level Finance
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