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    toluodetola's Avatar
    toluodetola Posts: 4, Reputation: 1
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    #1

    Feb 14, 2012, 11:31 AM
    Interest only loan
    Curtis Builders is borrowing $140,000 today for 5 years. The loan is an interest-only loan with an APR of 9.5 percent. Payments are to be made annually. What is the amount of the first annual payment?
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Feb 14, 2012, 02:21 PM
    Interest = Principal * Rate * Time

    Since the loan is interest only the first four payments will be interest only, while the last payment will be interest and the Principal.
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