Question

You purchase a cottage for $185,000. You obtain a 20-year, fixed rate mortgage loan at 13.0% after paying a down payment of 30%. Of the second month's mortgage payment, how much is interest and how much is applied to the principal? (Round your answers to the nearest cent.)

A. interest $_____

B. applied to the principal $_____

Answer 1

Solution:

Down Payment = 30% of  $185,000 =  $185,000*0.30 = $55,500

Amount to be financed, PV =  $185,000 - $55,500 = $129,500

Interest rate, r = 13% = 0.13

time, t = 30 years

Monthly payment is,

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