Question

Consider the following loan. Complete parts (a)-(C) below.An individual borrowed $63,000 at an APR of 7%, which will be paid off with monthly payments of $445 for 25 years.The amount borrowed is $ 63,000, the annual interest rate is 7%, the number of payments per year is 12, and the payment amount is $ 445.b. How many total payments does the loan require? What is the total amount paid over the full term of the loan?There are ?? payments toward the loan and the total amount paid is ??

Answer 1

Step-by-step explanation:

b)From the question, we have it that there are 12 payments in a year and this goes on for 25 years

The number of repayments is:

`\text{ 25}*12=\text{ }300`

Now, to get the total amount paid, we have to multiply the number of repayments by the payment per repayment:

`\text{ 300}*\text{ 445 = \$133,500}`

c) of the total amount paid, we want to get the value paid towards the principal and the amount paid as interest

The loan value is $63,000 and the total amount repaid is $133,500

The amount paid as interest is the difference between the amount paid and the amount borrowed:

`\text{ interest = \$133,500 - \$63,000 = \$70,500}`

We have the percentage as:

`\begin{gathered} (63000)/(133500)\text{ = 47.2\% } \\ \text{This is the percentage paid towards principal} \\ \text{Percentage towards interest is 100 - 47.2 = 52.8 \%} \end{gathered}`