Math

Is there anyone on this site is good at math, to do with Finances interest and principals. I really would appreciate any help that i can get.

I am. What do you need?

I am good at maths, don't know about math though I know i know it's an american thing.

This is what they have in the book and this is supposed to be the way they work it out but i still don't understand.180,000x 8.36%x1 over 12=1366.22 interest -1254 then 1366.22-1254=112.22
then it says a) how much is interest and how much is applied to principal to lower principal b) if the family pays the entire 360 payments how much would be interest on the loan (c determinethe new principalto determine how much of second payment is interest and how much is applied to reduce principal

I think I'm missing something.

Can you give the entire problem? Everything it has from the book?

The Kaufmans recently purchased a home.They borrowed 180,000 at 8.36% for 30 years (360 payments. Their monthly payments is 1366.22
a) How much of the first payment is interest and how much is applied to reduce the principal.
b)if the Kaufmans pay the entire 360 payments how much interest will be paid on the loan
c)Determine the new principal after the first payment
use the new principal to dtermine how much of the second payment is interest and how much is applied to reduce the principal.

I take it the interest is worked out reducing balance style and not straight line style. This looks like an accounting sort of question and basic wording of this type of thing i quite different from what i am used to but it appears to be the same kind of question.

I forgot about this thread


What, exactly, are you having trouble with? I understand the question now.

I think they just want to know the answer.

Try to keep up jonnythan

well i also would like to figure out how you get the answer. Because if i just get the answer thats not going to help me much if i can't figure out the answer.

Walk me through your thought process, if any, for this problem and I will help you wherever you get hung up.

Hey Sweetness!

I can't seem to arrive at the same numbers that you say are in your textbook....

180K, borrowed at 8.6% (per year)
For the first month, as per the textbook, you would multiply the Principal (180K) by the Interest Rate (for the year) and divide by 12, (for the interest, per month).

One month's interest is 1290 [not 1254!], compounded monthly. If you deduct this from the payment: 1366.22 - 1290 = 76.22, the amount by which the principal is reduced....

This means that the 2nd months payment of 1322 would cover the interest on (180K - 76.22), the remaining Principal of 179923.80 --
If you calculate the 2nd months interest in the same manner, you should see 1289.45. So, the reduction in Principal is.... a whopping 76.76 --- do this in a spreadsheet to avoid headaches!

At the end of 12 months, you will have paid 15443.07 in interest, and have reduced your debt by only 951.57 -- Don't you just love to make deals with banks?

well thnax so much for the help but i still can't figure it out i still keep coming up with 1254
guess i'm doing it all wrong

To get 1290 just do 180,000x0.086(the interest changed from a percentage) then divide whole thing by 12... that may not be correct however.

Even more perplexing, when you continue to calculate as your textbook demonstrates, at the end of 30 years (360 months), you will have turned over 363,403.88 in interest, but still owe 52554.27 in Principal. ????

Do you come to the same conclusion, Jonathan?

What kind of textbook is this? Name, publisher, etc.???

Edit: Just a sec! I used 8.6 as an interest rate, not 8.36 --