Question

When the new principal on a loan is $79,946.13 and the interest rate is 8 percent, the monthly payment is $587.20. Find the interest, the payment to principal, and the new balance. STEP 1: Find the interest.

Answer 1

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Answer:

• to interest: $532.97
• to principal: $54.23
• new balance: $79,891.90

Step-by-step explanation:

The interest is found by multiplying the monthly rate by the balance on the loan. For the first month, the balance is the loan amount.

  $79,946.13 × 0.08 ×(1/12) . . . . . one month = 1/12 year

  = $532.97

The interest amount in the first payment is $532.97.

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The amount of the first payment that goes to principal is what is left after the interest is paid:

  $587.20 -532.97 = $54.23 . . . amount to principal

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The new balance is the previous balance less the amount to principal:

  $79,946.13 -54.23 = $79,891.90 . . . new balance