In a loan, the principal borrowed plus interest must be repaid. So, part of each loan...
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In a loan, the principal borrowed plus interest must be repaid. So, part of each loan payment is interest and the rest reduces the principal. For example: Payment 1: We know that he has to pay $45.84 each month. If we just examined the first month, we know that there it is the first of 12 payments. We know that an annuity is a series of compound interest predicaments added together, so if we are examining an individual row, we are using compound interest. A = 45.84, i-0.015, n 12, P = ? P(1+0.015) 2 12 45.84 P(1+ 45.84 (1+0.015) 12 P = $38.34 = P . We see that only $38.34 is going towards the principal, the rest, $7.50 is interest. Select one other payment on the repayment schedule. Repeat these calculations for them to show how you get the money going towards principal and to interest In a loan, the principal borrowed plus interest must be repaid. So, part of each loan payment is interest and the rest reduces the principal. For example: Payment 1: We know that he has to pay $45.84 each month. If we just examined the first month, we know that there it is the first of 12 payments. We know that an annuity is a series of compound interest predicaments added together, so if we are examining an individual row, we are using compound interest. A = 45.84, i-0.015, n 12, P = ? P(1+0.015) 2 12 45.84 P(1+ 45.84 (1+0.015) 12 P = $38.34 = P . We see that only $38.34 is going towards the principal, the rest, $7.50 is interest. Select one other payment on the repayment schedule. Repeat these calculations for them to show how you get the money going towards principal and to interest
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SOLUTION To analyze the repayment schedule and answer the questions lets consider Payment 2 as an example Payment 2 We know that the monthly payment is 4584 and it is the second of 12 payments We will ... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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