Question

Clifton took out a 30-year loan for $130,000 at 5.5% interest, compounded monthly. if his monthly payment on the loan is $738.13, and if $595.83 of his first payment went toward interest, how much of his second payment went toward interest?

Answer 1

$595.18 is the amount of his second payment went toward interest.

Explanation:

Given : Clifton took out a 30-year loan for $130,000 at 5.5% interest, compounded monthly. if his monthly payment on the loan is $738.13, and if $595.83 of his first payment went toward interest.

To find : How much of his second payment went toward interest?

Solution :

Loan amount = $130,000

Rate of interest = 5.5%=0.055

Time = 30 year

Monthly payment = $738.13

First payment towards interest = $595.83

After the first payment, Clifton's loan balance is

`\$130000 + \$595.83 - \$738.13 = \$129,857.70`

One month's interest on this balance is

`\$129857.70 * (0.055)/(12) = \$595.18`

Therefore, $595.18 is the amount of his second payment went toward interest.

Answer 2

After the first payment, Clifton's loan balance is

... $130,000 + 595.83 - 738.13 = $129,857.70

One month's interest on this balance is

... $129,857.70 × 0.055/12 = $595.18