Michelle would like to know how much of her loan payments will go toward interest. She has a $124,500 loan with a 5.9% interest
1 answer:
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Answer:
$40,615.20
Step-by-step explanation:
The amortization formula will tell you Michelle's monthly payment.
A = P(r/12)/(1 -(1 +r/12)^(-12t)) . . . . loan value P at interest rate r for t years
A = $124,500(0.059/12)/(1 -(1 +0.059/12)^(-12·10)) ≈ $1375.96
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The total of Michelle's 120 monthly payments is ...
12 × $1375.96 = $165,115.20
This amount pays both principal and interest, so the amount of interest she pays is ...
$165,115.20 -124,500 = $40,615.20
Michelle will pay $40,615.20 in interest over the course of the loan.
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A calculator or spreadsheet can figure this quickly.
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