SOLUTION: A family borrowed $72,000 to buy a house. The loan was at 6.1% and for 25 years. The monthly payments were $468.31 each. (See Example 6.)
(a) How much of the first month's payment
Algebra ->
Finance
-> SOLUTION: A family borrowed $72,000 to buy a house. The loan was at 6.1% and for 25 years. The monthly payments were $468.31 each. (See Example 6.)
(a) How much of the first month's payment
Log On
Question 1194571: A family borrowed $72,000 to buy a house. The loan was at 6.1% and for 25 years. The monthly payments were $468.31 each. (See Example 6.)
(a) How much of the first month's payment was interest, and how much was principal?
interest $
principal $
(b) What was the total amount paid over the 25 years?
$ Answer by math_tutor2020(3838) (Show Source):
The annual interest rate is 6.1%
The monthly rate is (6.1%)/12 = 0.50833333333333% approximately.
The 3's go on forever.
This percentage then converts to the decimal form 0.0050833333333333
Either divide by 100, or simply move the decimal point over two spots to the left.
Multiply this approximate decimal value with the current balance.
72,000*0.0050833333333333 = 366
This result is the interest for the first month.
Yes the interest portion is quite high. It's common to have high interest payments at first.
As time goes on, the interest steadily goes down as the principal goes up.
The reason for this is because the balance will go down.
Subtract the interest from the monthly payment to compute the principal
468.31 - 366 = 102.31
(