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the next four questions refer to thr first row of a loan amorization schedule based on...

the next four questions refer to thr first row of a loan amorization schedule based on the following information. the loan amount is for 28723 with an annual interest rate of 11.8%. the loan will be repaid over 7 years with monthly payments.

1) what is the monthly payment amount to thr nearest cent?
2) what is the first months payment interest amount to thr nearest cent?
3) what is the first months payment principal amount to the nearest cent?
4) what is the loan balance after thr first months payment?

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Homework Answers

Answer #1

Solution :-

Loan Amount = $28,723

Interest Rate Per Month = 11.8% / 12 = 0.9833%

Now total monthly Payments during 7 Years = 12 * 7 = 84

Now Monthly Payment = $28,723 / PVAF ( 0.9833% , 84 )

= $28,723 / 56.9932

= $503.97

(a) Monthly Payment = $503.97

(b) First Month Interest = $28,723 * 0.9833% = $282.44

(c) First Month Principal Repayment = $503.97 - $282.44 = $221.53

(d) Loan Balance after First Payment = $28,723 - $221.53 = $28,501.47

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