Question

Christopher is getting a mortgage for a house and will borrow $700,000. For this mortgage, the amortized loan requires annual payments for 22 years at a 4.5% annual interest rate. How much of the first payment (to the nearest cent) is the interest owed for the first year of the loan?

Answer 1

Explanation:

How to find the amount of interest owed for the first year of the loan?

To calculate the interest owed for the first year of the loan, we need to consider the loan amount, the annual interest rate, and the loan term.

In this case, borrowing $700,000 for 16 years at an annual interest rate of 7.4%.

The interest owed for the first year can be determined by multiplying the loan amount by the annual interest rate:

Interest = Loan Amount * Annual Interest Rate

Interest = $700,000 * 0.074

Calculating this, we find that the interest owed for the first year is approximately $51,800.30.