Question

Ron's Loan: Ron borrows $3,000,000 to purchase a warehouse. The annual interest rate on the loan is 8.25 percent, and the term of the loan is 15 years.

How much principal will Ron pay in month 37?

Enter your answer rounded to the nearest penny with no punctuation, but do not use the rounded intermediate results in future calculations involving Ron's Loan (keep all available decimals).

Answer 1

Rate per month =8.25%/12
Number of Months =12*15 =180
PV of Loan =3000000
Monthly Payment =PV/((1-(1+r)^-n)/r) =3000000/((1-(1+8.25%/12)^-180)/(8.25%/12))=29104.2107

Principal at the end of 36th month =PV*(1+r)^n-PMT*((1+r)^n-1)/r)
=3000000*(1+8.25%/12)^36-29104.2107*((1+8.25%/12)^36-1)/(8.25%/12))=2654991.5932

Principal at the end of 37th month =PV*(1+r)^n-PMT*((1+r)^n-1)/r)
=3000000*(1+8.25%/12)^37-29104.2107*((1+8.25%/12)^37-1)/(8.25%/12))=2644140.4498

Principal paid at the end =2654991.5932-2644140.4498 =10851.14