Answer:
Monthly Payment = $2,286.85
Interest on first month payment = $1,793.75
Principal value on first month payment = $493.10
Step-by-step explanation:
lars has been approved for $420,000 for loan.
Time for loan = 20-years
APR (Annual Rate of interest ) = 5.125%
We need to find monthly payment. First month interest and First month principle.
Formula for loan:
[tex]p=\dfrac{PV\cdot \frac{r}{n}}{1-(1+\frac{r}{n})^{-nt}}[/tex]
Where,
p is monthly payment.
PV = Loan Amount (PV=$420,000)
R = Rate of interest (R=0.05125)
t = Loan period ( t=30)
n = Mode of payment (n=12)
Substitute the value into formula and solve for p
[tex]p=\dfrac{420000\cdot \frac{0.05125}{12}}{1-(1+\frac{0.05125}{12})^{-12\cdot 30}}[/tex]
p=$2,286.85
Thus, Monthly Payment =$2,286.85
Interest for first month [tex]=420000\times \dfrac{0.05125}{12}=1793.75[/tex]
Interest pay on the loan in on month = $1,793.75
Principle value on first month payment = 2286.85 - 1793.75 = $493.10
The monthly payment will go towards the principal is $493.10
