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Approximately how much of the first payment will be interest for a $259,000, thirty year...

Question:

Approximately how much of the first payment will be interest for a $259,000, thirty year mortgage, 3.42% APR, annual payments?

A.) $13,941.38

B.) $11,421.90

C.) $9,753.65

D.) $8,857.80

Interest

Interest refers to the incurred charges (gain) of a certain sum of money which is borrowed or invested. Interest is consider as the price of money as it is the corresponding cost in acquiring such level of capital.

Answer and Explanation:

Formula on calculating the interest payment in a period.

{eq}Interest=Balance*Interest~rate\\ {/eq}

In this case, the balance would be $259,000 since it ask for the interest paid of the first payment.

{eq}\begin{align*} Interest&=259,000*.0342\\ &=8,857.80 \end{align*} {/eq}

The total amount paid to the loan's interest on its first payment is D. $8,857.80


Learn more about this topic:

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How to Calculate Interest Expense: Formula & Example

from Financial Accounting: Help and Review

Chapter 5 / Lesson 18
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