Question

Jesse took out a 30-year loan for $85,000 at 7.2% interest, compounded monthly. If his monthly payment on the loan is $576.97, how much of his first payment went toward note reduction(reducing principal)? Show your work.

Answer 1

the correct answer for this question is 66.97

Answer 2

Answer:

$66.97 is his first payment went toward reduction.

Step-by-step explanation:

Given : Jesse took out a 30-year loan for $85,000 at 7.2% interest, compounded monthly. If his monthly payment on the loan is $576.97.

To find : How much of his first payment went toward note reduction(reducing principal)?  

Solution :

First we find the interest of 1 month on a loan of $85,000 at 7.2% interest.

$I=85000\times \frac{7.2}{12\times 100}$

$I=85000\times 0.006$

$I=510$

Interest of 1 month is $510.

Monthly payment = $576.97

Now, first payment or reducing principal is given by

F= monthly payment - interest of 1 month

F=$576.97- $510

F=$66.97

Therefore, $66.97 is his first payment went toward reduction.