You have just taken out a $ 17 comma 000 car loan with a 6...

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You have just taken out a $ 17 comma 000 car loan with a 6 %?APR, compounded monthly. The loan is for five years. When you makeyour first payment in one? month, how much of the payment will gotoward the principal of the loan and how much will go toward?interest????(Note: Be careful not to round any intermediate stepsless than six decimal? places.)

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3.7 Ratings (431 Votes)

Step-1:Calculation of monthly payment
Monthly Payment = Loan amount / Present value of annuity of 1
= $       17,000 / 51.725561
= $       328.66
Working:
Present value of annuity of 1 = (1-(1+i)^-n)/i Where,
= (1-(1+0.005)^-60)/0.005 i 6%/12 = 0.005
= 51.725561 n 5*12 = 60
Step-2:Calculation of principal and interest in first month's payment
First month's interest = Loan amount * Monthly Interest rate
= $       17,000 * 0.005
= $               85
First month's principal repayment = $       328.66 - $           85
= $       243.66

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Transcribed Image Text

You have just taken out a $ 17 comma 000 car loan with a 6 %?APR, compounded monthly. The loan is for five years. When you makeyour first payment in one? month, how much of the payment will gotoward the principal of the loan and how much will go toward?interest????(Note: Be careful not to round any intermediate stepsless than six decimal? places.)

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