Respuesta :
Answer: The higher the principal, the higher the total cost of the loan
Explanation:
From the chart shown we can see that the loan with a higher principal has a higher total cost than the loan with the smaller principal.
This happens because the interest rate attached affects larger figures more than smaller ones. 6.47% of $6,000 is $389 which is larger than 6.47% of $5,000 which is $324 (calculating the cost of a loan is more cumbersome than this but this shows the effect as well).
When compounded overtime, this difference will be even more and thus shows that larger principals cause larger total costs.
Answer:
The higher the principal, the higher the total cost of the loan
Explanation: In a part of the mortgage payment is dedicated to repayment of the principal balance.
- Now explain that Loans are structured so the amount of principal returned to the borrower starts low and increases with each mortgage payment.
- Then, The payments in the first years are applied more to interest than principal, while the payments are in the final years.
In our mortgage $100,000, The principal is $100,000.
- This happens because the interest rate attached affects larger First figures will more than smaller ones.
6.47% of $6,000 is $389 which is larger than = 6.47% of $5,000 which is $324 .
now,(calculating the cost of a loan is more this shows the effect as well).
- When compounded over time, this is difference will be even more and thus shows that larger principals cause larger total costs.
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