The amount of interest that will go towards the first monthly payment of a $97,000 loan at 4% interest for 20 years with a monthly payment of $614.01 is $3594.50.
Here's how we can calculate it:
Calculate the outstanding balance after the first payment: Subtract the monthly payment from the loan amount:
$97,000 - $614.01 = $93,405.99.
Calculate the first month's interest: Multiply the outstanding balance by the monthly interest rate:
$93,405.99 * (4% / 12) = $3594.50.
Therefore, $3594.50 of the first monthly payment will go towards interest.
The remaining $2545.51 will be applied to the principal, reducing the loan balance to $90,810.48.
Question
The monthly payments on a $97,000 loan at 4% interest for 20 years is $614.01. how much of the first monthly payment will go toward interest?