Answer:
- monthly payment $1214.95
- 1st month's interest $991.67
- balance after 1st payment $139,776.72
- 2nd month's interest $990.09
- balance after 2nd payment $139,551.86
Step-by-step explanation:
The monthly interest rate is ...
a) The monthly payment is given by the amortization formula:
A = Pr/(1 -(1+r)^-n)
where r is the monthly interest rate on a loan of amount P for n months.
A = $140,000(0.0070833)/(1 -(1.0070833^-240)) = $1214.95
The monthly payment is $1214.95.
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b) The amount to interest is the product of the remaining principal and the monthly interest rate.
first month's interest = $140,000·0.0070833 = $991.67
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c) The balance after the first payment is ...
new balance = $140,000 +991.67 -1214.95 = $139,776.72
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d) The amount to interest for the second payment is computed the same way:
second month's interest = $139,776.72·0.00708333 = $990.09
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e) The balance after the second payment is computed the same way:
new balance = $139,776.72 +990.09 -1214.95 = $139,551.86
