RatedrillInterest part of payment k
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
A $105,000, 30-year mortgage at 4.25% APR has a monthly payment of $516.54. How much of payment number 85 is interest?
What this problem teaches
Enter the loan, then open the amortization worksheet with P1 = P2 = k. Set P/Y = C/Y = 1, so I/Y is the rate per period. Cash you pay out is negative and cash you receive is positive.
A hint if you get stuck
Interest in payment k = balance after payment k - 1 × the monthly rate.
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