Question

In: Finance

you are planning to borrow $10,000 to buy a new car. the loan is being made...

you are planning to borrow $10,000 to buy a new car. the loan is being made to you ag 8.0% annual percentage rate. you will make monthly payment for four years. how mi h of the third monthly payment will go to the paymebt of principal

Solutions

Expert Solution

Monthly rate(M)= yearly rate/12= 0.67% Monthly payment= 244.13
Month Beginning balance (A) Monthly payment Interest = M*A Principal paid Ending balance
1 10000.00 244.13 66.67 177.46 9822.54
2 9822.54 244.13 65.48 178.65 9643.89
3 9643.89 244.13 64.29 179.84 9464.06
4 9464.06 244.13 63.09 181.04 9283.02
5 9283.02 244.13 61.89 182.24 9100.78
6 9100.78 244.13 60.67 183.46 8917.32
7 8917.32 244.13 59.45 184.68 8732.64
8 8732.64 244.13 58.22 185.91 8546.73
9 8546.73 244.13 56.98 187.15 8359.58
10 8359.58 244.13 55.73 188.40 8171.18
11 8171.18 244.13 54.47 189.65 7981.52
12 7981.52 244.13 53.21 190.92 7790.60
13 7790.60 244.13 51.94 192.19 7598.41
14 7598.41 244.13 50.66 193.47 7404.94
15 7404.94 244.13 49.37 194.76 7210.18
16 7210.18 244.13 48.07 196.06 7014.11
17 7014.11 244.13 46.76 197.37 6816.75
18 6816.75 244.13 45.44 198.68 6618.06
19 6618.06 244.13 44.12 200.01 6418.05
20 6418.05 244.13 42.79 201.34 6216.71
21 6216.71 244.13 41.44 202.68 6014.03
22 6014.03 244.13 40.09 204.04 5809.99
23 5809.99 244.13 38.73 205.40 5604.60
24 5604.60 244.13 37.36 206.77 5397.83
25 5397.83 244.13 35.99 208.14 5189.69
26 5189.69 244.13 34.60 209.53 4980.15
27 4980.15 244.13 33.20 210.93 4769.23
28 4769.23 244.13 31.79 212.33 4556.89
29 4556.89 244.13 30.38 213.75 4343.14
30 4343.14 244.13 28.95 215.17 4127.97
31 4127.97 244.13 27.52 216.61 3911.36
32 3911.36 244.13 26.08 218.05 3693.30
33 3693.30 244.13 24.62 219.51 3473.80
34 3473.80 244.13 23.16 220.97 3252.83
35 3252.83 244.13 21.69 222.44 3030.38
36 3030.38 244.13 20.20 223.93 2806.46
37 2806.46 244.13 18.71 225.42 2581.04
38 2581.04 244.13 17.21 226.92 2354.11
39 2354.11 244.13 15.69 228.44 2125.68
40 2125.68 244.13 14.17 229.96 1895.72
41 1895.72 244.13 12.64 231.49 1664.23
42 1664.23 244.13 11.09 233.03 1431.20
43 1431.20 244.13 9.54 234.59 1196.61
44 1196.61 244.13 7.98 236.15 960.46
45 960.46 244.13 6.40 237.73 722.73
46 722.73 244.13 4.82 239.31 483.42
47 483.42 244.13 3.22 240.91 242.51
48 242.51 244.13 1.62 242.51 0.00
Where
Interest paid = Beginning balance * Monthly interest rate
Principal = Monthly payment – interest paid
Ending balance = beginning balance – principal paid
Beginning balance = previous Month ending balance

Percentage of principal in 3rd month = 179.84/244.13 = 73.67%


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