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You have just taken out a $40,000 car loan with a 6% annual percentage rate, compounded...

You have just taken out a $40,000 car loan with a 6% annual percentage rate, compounded monthly. The loan is for 10 years. When you make your second payment in two months, how much of this payment will go toward the principal of the loan?

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Answer #1

Ans $245.30

P = Regular Payments
PV = Loan Amount
r = rate of interest
n = no of periods
P = r (PV)
1 - (1 + r )^-n
P = (6%/12)*40000
1 - (1 / (1 + 6%/12)^120))
P = 200
0.450367267
P = 444.08
Beginning Balance Interest Principal Ending Balance
1 $40,000.00 $200.00 $244.08 $39,755.92
2 $39,755.92 $198.78 $245.30 $39,510.62
Principal in Second Payment $245.30
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