Question

You pay off a $10,000 loan with an APR of 12% over 10 years with fixed monthly payments
a)how big are the payments
b) how much do you pay total
c)what fraction of what you paid goes to interest?

Answer 1

use finance calculator like a BA II
A) enter 120 for n (num of months)
enter 1% for monthly int rate
enter 10,000 for present value
press compute payment
payment = 143.47

B) total = payment*num months
total = 143.47*120 = 17,216.40

C) (total - loanAmount) /loanAmount
= (17,216.40-10,000)/10,000
= 72.16%