Question

You have just taken out a $26,000 car loan with a 5% APR, compounded monthly. The loan is for five years. When you make your first payment in one month, how much of the payment will go toward the principal of the loan and how much will go toward interest? (Note: Be careful not to round any intermediate steps less than six decimal places) When you make your first payment will go toward the principal of the loan and will go toward the interest. (Round to the nearest cent)

Answer 1

Solution Calculate the Monthly payment after the one month first payment in as follows: Monthly payment - Present value & Interest rate 1-(it Interest rate No. of periods = 23000 X 0.05 51-5813 12 23000 x 0.05 23000 x 12 (1+00ggio 12 = 434003837381 434.04.

calculate the monthly Interest as follows: Monthly Interest - Loan amount & Interest rate $ 23000 X 0005 12 = 95.83333 95.83

calculate the princepal amount as follows: principal amount = Monthly payment - Interest = 434.04 – 95.83 = 338.21