Answer:
a. What is the interest? $ 56.67
b. What is the payment to principal? $ 327.53
c. What is the new balance? $ 8,172.47
Explanation:
1. Let's review the information given to us to answer the question correctly:
Time of the loan = 24 months
Amount of the loan = $ 8,500
Interest rate = 8% = 0.08 annually
Monthly payment = $ 384.20
2. For the first payment:
a. What is the interest?
Interest amount = Amount of the loan * Interest rate/Number of payments per year
Replacing with the values we know:
Interest amount =8,500 *0.08/12
Interest amount = 8,500 * 0.0066
Interest amount = $ 56.67
b. What is the payment to principal?
Payment to principal = Monthly payment - Interest amount
Replacing with the values we know:
Payment to principal = 384.20 - 56.67
Payment to principal = $ 327.53
c. What is the new balance?
New balance = Beginning balance - Payment to principal
Replacing with the values we know:
New balance = 8,500 - 327.53
New balance = $ 8,172.47