Answer to Question #123640 in Financial Math for Malia Losalu

Question

$9000 loan is to be repaid over 7 years with monthly payments of J12=12% p.a. Determine the amount of principal that is paid on the 5 payment.

Answer 1

Monthly payment = p (r(1+r)ⁿ)/((1+r)^n-1)

Mp =9000(0.01(1+0.01)⁸⁴)/((1+0.01)⁸³)

Mp=9000(0.01(1.01)⁸⁴)/(1.01)⁸³)

Mp= 9000(0.023)/(2.284)

Mp= 90.63

1^St Payment:

9000-90.63=8909.37

2^Nd Payment:

8909.37-9063= 8818.74

3rd payment:

8818.74-90.63= 8728.11

4th payment:

8728.11-90.63= 8637.48

5th payment:

8637.48-90.63= 8546.85