Question

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%

Answer 1

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%