Consider the following loan. Complete parts (a)-(c) below An individual borrowed

Question

Consider the following loan. Complete parts (a)-(c) below An individual borrowed $83,000 at an APR of 3%, which will be paid off with monthly payments of $444 for 21 years a. Identify the amount borrowed, the annual interest rate, the number of payments per year, the loan term, and the payment amount The amount borrowed is S b. How many total payments does the loan require? What is the total amount paid over the fu the annual interest rate is % the number of payments per years, and the payment amount is S year is the loan term is term of the loan? payments toward the loan and the total amount paid is S aid. what percentage is paid toward the principal and what percentage s paid for interest? There are The percentage paid toward the principal is (Round to the nearest tenth as needed) % and the percentage pad for interest is

Explanation / Answer

(a)

Amount borrowed = $83,000

Annual interest rate = 3%

total Number of payments = 21 years x 12 = 252

Number of payments per year = 12

total payment amount = 21*444 = 111,888

Loan term = 21 years = 252 months

b.

Loan term = 21 years = 252 months

so 252 payments of $444

c.

total payment amount = 252*444 = $111,888

principal = 83,000

principal as % of total = 83000/111888 = 74.18%

interest = 111,888 - 83,000 = $28,888

interest as % of total = 1 - principal as % of total = 25.82%

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