Question

Installment Loan$4000.00How much of the firstPrincipalpayment for theTerm Lengthinstallment loan12% shown in the table willMonthly Payment $105.00 go towards principal?4 yearsInterest RateA. $40.00B. $65.00C. $12.60D. $92.40

Answer 1

Given,

principal(P)=$4000

Term Length (t)=4 years

Interest rate(i)=12%.

Let, I be the amount of interest of 4 years. Then,

`\begin{gathered} I=(ptr)/(100) \\ =(4000*4*12)/(100) \\ =1920 \end{gathered}`

Now, the monthy interest is

`(1920)/(48)=40`

MOnthly payment is $105.

Therefore, the first payment of installment will go towards principal by

`(105-40)=65`

Hence, option (B) is correct.