Question

Installment Loan 20,000 6 years 4.5% Principal Term Length Interest Rate Monthly Payment 315 How much of the 36th payment will go to principal if there is a remaining principal of $11,041.73 before it is made? Principal = $[?]​

Answer 1

To find out how much of the 36th payment of a $20,000 installment loan goes to principal, calculate the remaining principal before the 36th payment. The amount that will go to principal in the 36th payment is $303.73.

Step-by-step explanation:

The question provides the following information: principal = $20,000, term length = 6 years, interest rate = 4.5%.

To find the monthly payment, we can use the formula:

Monthly Payment = (Principal * Interest Rate / (1 - (1 + Interest Rate)^(-Term Length)))

Plugging in the given values, the monthly payment is $315. To find out how much of the 36th payment goes to principal, we need to calculate the remaining principal before the 36th payment. Using the formula for the remaining principal in an installment loan:

Remaining Principal = Principal * (1 + Interest Rate)^n - (Monthly Payment * [(1 + Interest Rate)^n - 1] / Interest Rate)

Plugging in the values, we get a remaining principal of $11,041.73. Since the monthly payment is $315, the amount that will go to principal in the 36th payment is $303.73.