Suppose you borrowed $25,000 for a car at an APR of 8%, which you are paying off with monthly payments of $510 for 5 years.

a) What’s the loan principal?
b) What’s the annual interest rate?
c) How many payments do you make in a year?
d) What’s the loan term?
e) What’s the payment amount?
f) How many loan payments does the loan require?
g) What is the total amount paid over the full term of the loan?
h) Of the total amount paid, what percentage is paid toward the principal?
i) Of the total amount paid, what percentage is paid for interest?

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Questions a) - f) are just terms that are found right in the question.

from g) on they follow the same type as your other problems.

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a) To determine the loan principal, we can divide the total amount borrowed ($25,000) by the number of payments in the loan term. In this case, since the loan is being repaid in monthly installments over 5 years, or 60 months, the loan principal would be $25,000 divided by 60, which equals $416.67.

b) The annual interest rate is given as 8%. To convert this to a decimal, divide it by 100: 8% / 100 = 0.08 (interest rate as a decimal).

c) The number of payments made in a year is determined by the frequency of the payments. In this case, you are making monthly payments, so the number of payments in a year would be 12.

d) The loan term is given as 5 years, which implies that the loan should be fully repaid within this time period.

e) The payment amount is given as $510 per month.

f) The loan requires a total of 60 payments since it is being repaid over 5 years or 60 months.

g) To find the total amount paid over the full term of the loan, multiply the monthly payment amount by the total number of payments: $510 * 60 = $30,600.

h) To determine the percentage of the total amount paid toward the principal, divide the principal payment by the total amount paid and multiply by 100: ($416.67 / $30,600) * 100 = 1.36%.

i) To find the percentage of the total amount paid for interest, you subtract the principal payment percentage from 100% since the remaining percentage is the interest paid: 100% - 1.36% = 98.64%. Therefore, approximately 98.64% of the total amount paid is for interest.