You have taken out a 60-month, $26,000 car loan with an APR of 6%, compounded monthly. The monthly payment on the loan is $502.65. Assume that right after you make your 50th payment, the balance of the loan is $4,890.99. How much of your next payment goes toward principal and how much goes toward interest? Compare this with the prinicipal and interest paid in the first month's payment. The amount that goes towards interest is $. (Round to the nearest cent.) The amount that goes towards the principal is $ . (Round to the nearest cent.) Compare this with the prinicipal and interest paid in the first month's payment. (Select the best choice below.) O A. In the first month, the amount that goes towards principal is $372.65 and toward interest is $130.00. Therefore, you can see that over time, as you pay down the principal of the loan, less of your payment has to go to cover interest and more of your payment can go towards reducing the principal. O B. In the first month, the amount that goes towards principal is $372.65 and toward interest is $130.00. Therefore, you can see that over time, as you pay down the principal of the loan, more of your payment has to go to cover interest and less of your payment can go towards reducing the principal. OC. In the first month, the amount that goes towards principal is $130.00 and toward interest is $372.65. Therefore, you can see that over time, as you pay down the principal of the loan, more of your payment has to go to cover interest and less of your payment can go towards reducing the principal.
You have taken out a 60-month, $26,000 car loan with an APR of 6%, compounded monthly. The monthly payment on the loan is $502.65. Assume that right after you make your 50th payment, the balance of the loan is $4,890.99. How much of your next payment goes toward principal and how much goes toward interest? Compare this with the prinicipal and interest paid in the first month's payment. The amount that goes towards interest is $. (Round to the nearest cent.) The amount that goes towards the principal is $ . (Round to the nearest cent.) Compare this with the prinicipal and interest paid in the first month's payment. (Select the best choice below.) O A. In the first month, the amount that goes towards principal is $372.65 and toward interest is $130.00. Therefore, you can see that over time, as you pay down the principal of the loan, less of your payment has to go to cover interest and more of your payment can go towards reducing the principal. O B. In the first month, the amount that goes towards principal is $372.65 and toward interest is $130.00. Therefore, you can see that over time, as you pay down the principal of the loan, more of your payment has to go to cover interest and less of your payment can go towards reducing the principal. OC. In the first month, the amount that goes towards principal is $130.00 and toward interest is $372.65. Therefore, you can see that over time, as you pay down the principal of the loan, more of your payment has to go to cover interest and less of your payment can go towards 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
Related questions
Question
Transcribed Image Text:You have taken out a 60-month, $26,000 car loan with an APR of 6%, compounded monthly. The monthly payment on the loan is $502.65. Assume that right after you make your 50th payment, the balance of the loan
is $4,890.99. How much of your next payment goes toward principal and how much goes toward interest? Compare this with the prinicipal and interest paid in the first month's payment.
The amount that goes towards interest is $ . (Round to the nearest cent.)
The amount that goes towards the principal is $. (Round to the nearest cent.)
Compare this with the prinicipal and interest paid in the first month's payment. (Select the best choice below.)
O A. In the first month, the amount that goes towards principal is $372.65 and toward interest is $130.00. Therefore, you can see that over time, as you pay down the principal of the loan, less of your payment has
to go to cover interest and more of your payment can go towards reducing the principal.
O B. In the first month, the amount that goes towards principal is $372.65 and toward interest is $130.00. Therefore, you can see that over time, as you pay down the principal of the loan, more of your payment has
to go to cover interest and less of your payment can go towards reducing the principal.
C. In the first month, the amount that goes towards principal is $130.00 and toward interest is $372.65. Therefore, you can see that over time, as you pay down the principal of the loan, more of your payment has
to go to cover interest and less of your payment can go towards reducing the principal.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education