If a 9%,$100,000 loan has a balance of $83,724 and an annual payment of $13,965 is to be made,what will the allocation of principal and interest be?

Question

Quizplus · Accepted Answer

First, we need to calculate the total interest paid for the loan:

Total interest = Loan amount x Interest rate = $100,000 x 0.09 = $9,000

Then, we need to calculate how much of the annual payment goes towards interest:

Interest payment = Balance x Interest rate = $83,724 x 0.09 = $7,535.16

The remaining amount of the annual payment will go towards reducing the principal:

Principal payment = Annual payment - Interest payment = $13,965 - $7,535.16 = $6,429.84

So the allocation of principal and interest for the annual payment is:

- $7,535.16 towards interest 
- $6,429.84 towards principal

Therefore, the best choice is B: $7,535 interest, $6,430 principal.

If a 9%,$100,000 Loan Has a Balance of $83,724 and an Annual