To calculate the loan balance after making the third payment, we use the future value concept, which shows the balance as $61,153.54.
The future value concept describes the idea that the present value of cash flows today are not worth the same as their future value because of the time value of money.
The future value can be computed using the following future value formula:
FV = PV(1+r)^{n}
FV = future value
PV = present value
r = annual interest rate
{n} = number of periods interest held
Alternatively, we can use an online finance calculator to determine the future value of the loan after the third payment as follows:
N (# of periods) = 7 years
I/Y (Interest per year) = $6.75
PV (Present Value) = $97,600
FV (Future Value) = $0
Results:
Annual Payment = $16,817.29
Sum of all periodic payments = $117,721.04 ($16,817.29 x 7)
Total Interest = $20,121.04 ($117,721.04 - $97,600)
Balance after the third payment = $61,153.54
Period PV PMT Interest FV
1 $97,600.00 $16,817.29 $5,452.83 $86,235.54
2 $86,235.54 $16,817.29 $4,685.73 $74,103.98
3 $74,103.98 $16,817.29 $3,866.85 $61,153.54
4 $61,153.54 $16,817.29 $2,992.70 $47,328.95
5 $47,328.95 $16,817.29 $2,059.54 $32,571.19
6 $32,571.19 $16,817.29 $1,063.39 $16,817.29
7 $16,817.29 $16,817.29 $0.00 $0.00
Thus, the loan balance after making the third payment is $61,153.54.
Learn more about determining the loan balance at https://brainly.com/question/22846480
