Question

Jesse obtained a 20-year, $170,650 loan for his new town-home. The interest rate is 5.5% and his monthly payment is $1,173.88. For the first payment, find the new balance to the nearest cent.

Answer 1

$170,258.27

Explanation:

Principal = $170,650

Interest = 5.5%

Term = 20 years

Monthly payment = $1,173.88

The interest on the first month is simply simple interest of 1 month on the principal.

I = prt = $170,650 * 0.055 * 1/12 = $782.15

Subtract the interest from the first months payment to find the amount of principal paid.

$1,173.88 - $782.15 = $391.73

Since the amount of principal paid on the first month is $391.73, the balance after paying the first month's payment is the original principal reduced by the amount of principal paid in the first month.

balance = $170,650 - $391.73 = $170,258.27

Answer 2

939748.88 dollars is the answer