Thompson borrowed $1,200,000 from his bank. The annual rate on his loan is 5% and he...
Thompson borrowed $1,200,000 from his bank. The annual rate on
his loan is 5% and he has to repay it with 24 equal annual
payments. For his first payment, how much of it is used to reduce
his outstanding balance (or principal)?
A) $50,000
B) $32,458
C) $26,965
D) $22,371
E) $41,885
Homework Answers
calculation of periodic payment:-
=PMT(5%,24,1200000)
=86965.08
interest payment for the first period:-
=1200000*5%
=60000
Pricipal payment =26965
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