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19 June, 10:29

Taylor has a 25-year fixed rate loan for $295,500 at 6% interest. If his monthly payments are $1,903.91, how much will the principal balance be after his second payment?

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  1. 19 June, 10:42
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    remaining balance after second payment is $294645.05

    Step-by-step explanation:

    Given data

    loan amount = $295500

    rate (r) = 6 % = 6/12 = 0.5% = 0.005 monthly

    monthly payment = $1903.91

    time period = 25 years

    to find out

    balance be after his second payment

    solution

    first we calculate interest after 1st month is

    interest after 1st month = loan amount * rate

    interest after 1st month = 295500 * 0.005

    interest after 1st month = $1477.50

    so principal amount will be i. e. monthly payment - interest

    principal amount = monthly payment - interest

    principal amount = 1903.91 - 1477.50

    principal amount is $426.41

    and the remaining balance is i. e. loan amount - principal

    remaining balance = loan amount - principal

    remaining balance = 295500 - 426.41

    remaining balance is $295073.59

    now same we calculate interest after 2nd month is

    interest after 2nd month = loan amount * rate

    interest after 2nd month = 295073.59 * 0.005

    interest after 2nd month = $1475.37

    so principal amount will be i. e. monthly payment - interest

    principal amount = monthly payment - interest

    principal amount = 1903.91 - 1475.37

    principal amount is $428.54

    and the remaining balance is i. e. loan amount - principal

    remaining balance = loan amount - principal

    remaining balance = 295073.59 - 428.54

    remaining balance is $294645.05
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