Solve the problem.
-The monthly payments on a $50,000 loan at 7% interest for 25 years is $353.50. How much of the first monthly payment will go toward the principal?

Question

Solve the problem. 
-The monthly payments on a $50,000 loan at 7% interest for 25 years is $353.50. How much of the first monthly payment will go toward the principal?

Quizplus · Accepted Answer

The interest for the first month is calculated on the total loan amount at the annual rate, divided by 12 for the monthly rate. For a $50,000 loan at 7% interest, the monthly interest is $50,000 * 0.07 / 12 = $291.67. The total monthly payment is $353.50, so the amount going towards the principal is $353.50 - $291.67 = $61.83.

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