Final answer:
To determine the outstanding balance of the loan after the 12th payment, it is necessary to apply the annuity loan balance formula, taking into account the regular payments, the interest rate, and the number of payments made so far.
Step-by-step explanation:
The student is asking how to calculate the outstanding loan balance immediately after the 12th payment on a loan that was initially $12,000 with an effective annual interest rate of 10% and annual payments of $1,000.
To solve this problem, we can use the formula for the remaining balance of an annuity loan, which considers the original loan amount (present value), the interest rate, and the number of payments.
The formula expresses the present value PV of an annuity as PV = R[(1-(1+i)^-n)/i], where R is the regular payment, i is the interest rate per period, and n is the number of payments.
Using the given information, we can calculate the outstanding loan balance by considering what the balance would be after each payment and adjusting for interest accrued and principal paid down.