Question

A 10-year loan in the amount of $100,000 is to be repaid in equal monthly payments. The interest rate is 12 percent, compounded monthly. What is the amount of principal paid in the loan payment for month 3

Answer 1

The amount of principal paid in the loan payment for month 3 is:

= $443.45.

Step-by-step explanation:

a) Data and Calculations:

Loan amount = $100,000

Interest rate per annum = 12%

Period of loan = 10 years or 120 months

Repayment of loan principal and interest = equal monthly payments.

3rd Month Payment:

Total payment = $1,434.71

Interest $991.26

Principal = $443.45

Schedule of Payment for the first 3 months:

Period PV PMT Interest FV

1 $100,000.00 $1,434.71 $1,000.00 $99,565.29

2 $99,565.29 $1,434.71 $995.65 $99,126.23

3 $99,126.23 $1,434.71 $991.26 $98,682.79