Consider the following loan: a 60-month, $45,000 car loan with a 12% APR, compounded monthly. Assume thnat right after you make your 50th payment, the balance on the loan is $9,480.78. How much of your next payment goes toward principal, and how much goes toward interest? Compare this with the principal and interest paid in the first month's payment ($551.00 toward principal and $450.00 toward interest in the first month). What is happening? ..... The amount that goes toward interest is $ 94.81. Round to the nearest cent.) The amount that goes toward the principal is $ 906.19. Round to the nearest cent.) Over time, as the loan is paid, the principal becomes of each payment has to cover interest and V of each payment can go toward so reducing the principal.
Consider the following loan: a 60-month, $45,000 car loan with a 12% APR, compounded monthly. Assume thnat right after you make your 50th payment, the balance on the loan is $9,480.78. How much of your next payment goes toward principal, and how much goes toward interest? Compare this with the principal and interest paid in the first month's payment ($551.00 toward principal and $450.00 toward interest in the first month). What is happening? ..... The amount that goes toward interest is $ 94.81. Round to the nearest cent.) The amount that goes toward the principal is $ 906.19. Round to the nearest cent.) Over time, as the loan is paid, the principal becomes of each payment has to cover interest and V of each payment can go toward so reducing the principal.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The third box is also "less or more".
Transcribed Image Text:Consider the following loan: a 60-month, $45,000 car loan with a 12% APR, compounded monthly. Assume that right after you make your 50th payment, the balance
on the loan is $9,480.78. How much of your next payment goes toward principal, and how much goes toward interest? Compare this with the principal and interest
paid in the first month's payment ($551.00 toward principal and $450.00 toward interest in the first month). What is happening?
The amount that goes toward interest is $ 94.81
(Round to the nearest cent.)
The amount that goes toward the principal is $ 906.19
(Round to the nearest cent.)
Over time, as the loan is paid, the principal becomes
V of each payment has to cover interest and
V of each payment can go toward
so
reducing the principal.
smaller,
larger,
Transcribed Image Text:Consider the following loan: a 60-month, $45,000 car loan with a 12% APR, compounded monthly. Assume that right after you make your 50th payment, the balance
on the loan is $9,480.78. How much of your next payment goes toward principal, and how much goes toward interest? Compare this with the principal and interest
paid in the first month's payment ($551.00 toward principal and $450.00 toward interest in the first month). What is happening?
.....
The amount that goes toward interest is $ 94.81 .
(Round to the nearest cent.)
The amount that goes toward the principal is $ 906.19
(Round to the nearest cent.)
Over time, as the loan is paid, the principal becomes
V of each payment has to cover interest and
V of each payment can go toward
so
reducing the principal.
less
more
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