Question

# Victoria and David have a 30-year, \$75,000 mortgage with an 8% nominal annual interest rate. All...

Victoria and David have a 30-year, \$75,000 mortgage with an 8% nominal annual interest rate. All payments are due at the end of the month.

What percentage of their monthly payments the first year will go towards interest payments?

 7.76% 9.49% 82.17% 90.51% 91.31%

amortization schedule is

 Beginning Balance Interest Principal Ending Balance 1 \$75,000.00 \$500.00 \$50.32 \$74,949.68 2 \$74,949.68 \$499.66 \$50.66 \$74,899.02 3 \$74,899.02 \$499.33 \$50.99 \$74,848.02 4 \$74,848.02 \$498.99 \$51.33 \$74,796.68 5 \$74,796.68 \$498.64 \$51.68 \$74,745.01 6 \$74,745.01 \$498.30 \$52.02 \$74,692.98 7 \$74,692.98 \$497.95 \$52.37 \$74,640.61 8 \$74,640.61 \$497.60 \$52.72 \$74,587.89 9 \$74,587.89 \$497.25 \$53.07 \$74,534.82 10 \$74,534.82 \$496.90 \$53.42 \$74,481.40 11 \$74,481.40 \$496.54 \$53.78 \$74,427.62 12 \$74,427.62 \$496.18 \$54.14 \$74,373.48

percentage of interest payments

= total interest payments/total payments

= 5977.34/550.32*12

= 90.51%

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