Ditech Corporation borrowed $50,000 on January 1, 2013. The loan is for a ten-year period and has an annual interest rate of 9%. At the end of each year, Ditech will make a payment of $7,791, which includes both principal and interest. The amount of the payment for 2013 that is reduction of principal is $3,587.

Question

Quizplus · Accepted Answer

$50,000 x 9% = $4,500 interest expense; $7,791 - $4,500 = $3,291 applied toward principal

Ditech Corporation Borrowed $50,000 on January 1, 2013