Question

The amount owed on a loan after 8 months of payments is $151,455. If the annual...

The amount owed on a loan after 8 months of payments is $151,455. If the annual interest rate is 6%, how much of the next monthly payment of the $878 goes toward paying off the principle (loan amount) during this month? (a) $29.73 (b) $757.28 (c) $878.00 (d) $120.73

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Answer #1

(d) $120.73

Principal Paid in a month = Monthly Payment - Monthly Interest
= $           878.00 - $ 757.28
= $           120.73
Working:
Monthly Interest = Loan amount at the beginning * Monthly Interest rate
= $ 1,51,455.00 * 6%*1/12
= $           757.28
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