Question

Number of years= 20

Number of months=240

Annual Percentage Rate=8.00%

Monthly interest rate=0.67%

Loan amount=$441,747

Fixed monthly repayment amount=$ 3,694.95

1. Total amount of interest paid in the 3rd year?

2. The total principle paid in the 4th year?

3. The amount of the loan outstanding (loan balance) at the end of the month 30?

4. At the end of which month will it be for the loan outstanding (loan balance) to be less than 50% of the original loan amount for the first time?

5. The borrower actually had to pay $250 more each month due to hidden fees and charges. Calculate the implied nominal interest rate compounded monthly, the borrower is actually charged on the loan taking into account these charges.

Answer 1

Interest Paid = Oustanding (O/s) Loan at the beginning * Interest Rate per month
Principal Repaid = Monthly Payment - Interest Paid
Oustanding (o/s) Loan at the end =  Oustanding (O/s) Loan at the beginning - Principal Repaid

1) Total Interest paid in 3rd year is $33,592.56

2) Total Principal Paid in year 4 is  $11,643.45

3) Loan Balance at the end of month 30 is $419,185.25

4) The outstanding loan amount is less than 50% than the original loan amount in 166th Month for the first time