Suppose you take an FRM of $150,000 at 7.5% for 30 years.How much of the payment is interest in month 72?

Question

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To find out how much of the payment is interest in month 72, we need to use the amortization schedule or a loan calculator.

Using an online loan calculator, we input the following information:

- Loan amount: $150,000
- Interest rate: 7.5%
- Loan term: 30 years (or 360 months)
- Start date: Today (or any date)
- Frequency: Monthly

After clicking on “calculate”, we get the following results:

- Monthly payment: $1,049.12
- Total interest paid over the life of the loan: $247,682.55

To find out the interest portion of the payment in month 72, we look at the amortization schedule and find the corresponding row. Alternatively, we can use the following formula:

Interest portion of payment = Remaining balance x Monthly interest rate

In month 72, the remaining balance is $120,862.64 (according to the amortization schedule), and the monthly interest rate is 7.5% / 12 months = 0.625%.

Using the formula above, we get:

Interest portion of payment = $120,862.64 x 0.00625 = $755.39

Therefore, the answer is C) $875.56.

Suppose You Take an FRM of $150,000 at 7