Question

The monthly payment on a $71,000 loan at 12% annual interest is $785.26. What is the balance of principal after the first monthly payment?
a) 70,397.80
b) 71,710.00
c) 70,219.00
d) 70,924.74

Answer 1

Answer:

After your payment

A = 71,000  - 785.26 = 70,214.74

You also have an interest payment of

71000 * .12 / 12 = 710

The total owed is

70,214.74 + 710 = 70,924.74

Answer 2

9514 1404 393

Answer:

  d)  70,924.74

Step-by-step explanation:

The new principal after a payment is the difference between the old principal and the amount of the payment applied to principal. That applied amount is the difference between the payment amount and the interest due.

The interest due each month is computed at a rate equal to the annual rate divided by 12. For the first month, the interest due is ...

  $71,000 × 12%/12 = 0.01 × $71,000 = $710

Then the amount of the payment applied to principal is ...

  $785.26 -710.00 = $75.26

And the new principal after the first payment is ...

  $71,000 -75.26 = $70,924.74