The repayment schedule is for a $1,300 loan at 7.5% for 6 months. What is the principal after the first payment?
1 answer:
First, you will need to calculate the monthly payment.
The loan payment formula is attached.
(I'll leave it up to you to show the math).
Anyway, using a loan calculator, the monthly payment is 221.43
the monthly loan rate of 7.5% = rate / 1,200
.00625
Let's calculate the interest paid for the first payment
<span>
Interest Paid = Previous Balance * Monthly Interest Rate</span>
<span>Interest Paid = 1,300 * .00625
</span>Interest Paid = $8.13
Now to calculate equity.
Equity = Monthly Payment -Interest Paid
<span>Equity = 221.43 -8.13
</span><span>Equity = 213.30
The equity (or what you own), is 213.30
The New Loan Balance (or the principal) is calculated by
</span><span>New Balance = Previous Balance -Equity
</span><span>New Balance (or principal) = 1,300 -213.30
= </span><span>1086.7</span>0
You might find this page VERY helpful:
http://www.1728.org/loanmath.htm
The loan payment formula is attached.
(I'll leave it up to you to show the math).
Anyway, using a loan calculator, the monthly payment is 221.43
the monthly loan rate of 7.5% = rate / 1,200
.00625
Let's calculate the interest paid for the first payment
<span>
Interest Paid = Previous Balance * Monthly Interest Rate</span>
<span>Interest Paid = 1,300 * .00625
</span>Interest Paid = $8.13
Now to calculate equity.
Equity = Monthly Payment -Interest Paid
<span>Equity = 221.43 -8.13
</span><span>Equity = 213.30
The equity (or what you own), is 213.30
The New Loan Balance (or the principal) is calculated by
</span><span>New Balance = Previous Balance -Equity
</span><span>New Balance (or principal) = 1,300 -213.30
= </span><span>1086.7</span>0
You might find this page VERY helpful:
http://www.1728.org/loanmath.htm
You might be interested in