April segal and her sister obtained a 25 year, $120,000 loan for their new home. The interest rate is 7.5 percent and their monthly payment is $886. How much of the first payment is for principal

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Business

Hunter Farley

5 February, 18:58

April segal and her sister obtained a 25 year, $120,000 loan for their new home. The interest rate is 7.5 percent and their monthly payment is $886. How much of the first payment is for principal

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Butterfinger · Answer 1

So this is creating what is called an amortization table.

For this you will need 5 columns:

Beginning Principal Payment Interest Pd. Principal Pd. New Principal 120,000 886 750. 136 119,864

119,864 886. 749.15. 136.85. 119,727.15

To figure the interest paid for each payment you take the Interest Rate (7.5%) and divide that by 12 (the number of months in a year), You then take that rate and multiply by the beginning principal amount. This will tell you how much of your payment went to interest for that month.

For Principal paid, you take the total payment amount and subtract the interest paid you calculated in the previous step. This will tell you how much of your payment went to the principal on your loan.

For the new principal, you take the beginning principal and subtract the principal paid. This then becomes your beginning principal on the next line as well.