Question

The total amount paid on a 35 year loan was $98,000 . If the interest rate was 4.1% and compounded monthly, what was the principal? Round your answer to the nearest dollar.

Answer 1

The principal of the loan is approximately $47,052.

Step-by-step explanation:

To find the principal of a loan, we can use the formula:

Principal = Total amount / (1 + interest rate/number of compounding periods) ^ (number of compounding periods * number of years)

In this case, the total amount is $98,000, the interest rate is 4.1% (or 0.041 in decimal form), and the loan is compounded monthly (so there are 12 compounding periods per year). Plugging in these values, we can calculate the principal:

Principal = $98,000 / (1 + 0.041/12) ^ (12 * 35) = $47,052

Therefore, the principal of the loan is approximately $47,052.