Question

The Monthly payments on a $73,000 loan at 13% annual interest are 8.7%. How much of the first monthly payment will go toward the principal?

Answer 1

The amount of the first monthly payment of $6,351 that will go toward the principal is $5,560.17.

The amount of principal repayment is computed as follows:

The mortgage amount = $73,000

Annual interest rate = 13%

Monthly payment = $6,351 ($73,000 x 8.7%)

First monthly interest = $790.83 ($73,000 x 13% x 1/12)

First principal repayment = $5,560.17 ($6,351 - $790.83)

Thus, we can conclude that the first principal repayment is $5,560.17.