Question

You have taken a 5 year car loan of $30,000 at 3% APR with monthly compounding. What is the amount of principal & interest payment in your first month payment?

A. Principal: $464.06; Interest: $75

B. Principal: $539.06; Interest $1.35

C. Principal: $539.60; Interest: $0

D. Principal: $500.00; Interest: $39.06

E. Principal: $470.89; Interest: $75

Answer 1

Ans  A. Principal: $464.06; Interest: $75

	P =	Regular Payments
	PV =	Loan Amount
	r =	rate of interest
	n =	no of periods
	P =	r (PV)
		1 - (1 + r )^-n
	P =	(3%/12)*30000
		1 - (1 / (1 + 3%/12)^60))
	P =	75
		0.139130894
	P =	539.06
	Beginning Balance	Interest	Principal	Ending Balance
1	30000	75	464.06	29460.94
		(30000 * 3%/12)	(539.06 - 75)	(30000 - 464.06)
	Principal in First Payment	464.06
	Interest in First Payment	75.00