Question

You have just taken out a $23000 car loan with a ​5% APR, compounded monthly. The loan is for five years. When you make your first payment in one​ month, how much of the payment will go toward the principal of the loan and how much will go toward​ interest?  ​(Note: Be careful not to round any intermediate steps less than six decimal​ places.) When you make your first​ payment, ​$___ will go toward the principal of the loan and ​$___ will go toward the interest.  ​(Round to the nearest​ cent.)

Answer 1

PV =

r = 5%/12 = 0.4167% (monthly), n = 5 * 12 = 60 months

23000 = P * 52.99071

P = $434.04

Interest Payment in first payment = $23,000 * 0.4167% = $95.83

Principal Payment = $434.04 - $95.83 = $338.21

When you make your first​ payment, ​$338.21 will go toward the principal of the loan and ​$95.83 will go toward the interest.