Answered: Josiah took out a 25-year loan for…

Josiah took out a 25-year loan for $215,000 at 9.6% interest, compounded monthly. If his monthly payment on the loan is $1893.41, how much of his first payment went toward note reduction?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 15E

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Josiah took out a 25-year loan
for $215,000 at 9.6% interest,
compounded monthly. If his
monthly payment on the loan is
$1893.41, how much of his first
payment went toward note
reduction?

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