What is interest and what is principal

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Reference no: EM13257084

You have just negotiated a six-year, 6.84%, $45,000 new car loan with the manager of a local auto dealer. While he goes back to the loan arranger to bring you the payment details, you decide to figure them out for yourself.

a. What is the monthly payment that you would have to make on this loan?

b. If the loan arranger tells you that the monthly payment is $798.75 per month, what is the difference between the present value of his payments and the present value of the payments you calculated in part a? Did the loan arranger over-, or under-, charge you?

c. After making your first thirty-six payments (of the amount in part a), how much would you still owe on the loan?

d. How much interest and principal would you pay over the first three years of the loan? Clearly indicate what is interest and what is principal.

Reference no: EM13257084

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