Question

You have just taken out a $16,000 car loan with a 6% 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

Loan taken (PV) = $ 16,000

Rate = 6%/12

Number of years (nper) = 5 * 12 = 60 months

Total Monthly payment (PMT) = = $ 309.32

=pmt(6%/12,60,16000 PMT(rate, nper, pv, [fv], [type])

Interest payment in the first month = 16000* 6%/12 = $ 80

Principal payment in the first month = Total Monthly payment - Interest = (309.32 - 80) = $ 229.32