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Your Company has just taken out a 1-year installment loan for $72,500. The nominal rate is 12.0%,...

Question:

Your Company has just taken out a 1-year installment loan for $72,500. The nominal rate is 12.0%, but with equal end-of-month payments. What percentage of the 2nd monthly payment will go toward the repayment of principal?

What is Principal Repaid?

In the problem below we need to solve for the percentage of the payment that is made towards the principal. The principal is part of the payment that is made on the loan to reduce the loan amount. Not all loans have the same percentage paid out to the principal and interest.

Answer and Explanation:

Before we solve for the principal repaid for the second payment, we first need to solve for the payments made at the end of each month. We will need...

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Principal Amount: Definition & Formula

from Financial Accounting: Help and Review

Chapter 9 / Lesson 2
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