Mercedes was purchased by making a loan

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Joe Showoff bought a Mercedes when he came to Tech as an engineering student (so that his feet would not get cold on the way to those early morning classes). The Mercedes was purchased by making a loan that was to be paid off in 20 equal, quarterly payments. The interest rate on the loan was 12% per year with quarterly compounding. After four years, at the time that Joe made his 16th payment, he got married (too many dates!) and sold the Mercedes to his buddy Sam Pledge. Sam made arrangements with Joe's bank to refinance the loan and to pay Joe's unpaid balance by making 16 equal quarterly payments at the same interest rate that Joe was paying. After 3 k years, at the time that Sam made his 13th payment, Sam flunked out (too many dates!) and sold the car to Nancy. Nancy paid the bank $2,000 cash (she had a good summer job!) to pay the loan balance. What was the amount of Joe's loan to purchase the Mercedes when it was new?

Reference no: EM131001260

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