A straight loan has monthly interest payments of $738.02. The interest rate is 7.67%. What is the amount of the principal?

A straight loan has monthly interest payments of $738.02. The interest rate is 7.67%. What is the amount of the principal?

• A. $130,698.98
• B. $118,934.89
• C. $124,362.08
• D. $115,465.97

Answer: (D)

To determine the amount of the principal for a straight loan, the monthly interest payment can be used along with the interest rate. The formula to calculate the monthly interest payment is: \[ \text{Monthly Interest Payment} = \left( \frac{\text{Annual Interest Rate}}{12} \right) \times \text{Principal} \] In this case, the monthly interest payment is $738.02, and the annual interest rate is 7.67%, which needs to be converted to a monthly rate: \[ \text{Monthly Rate} = \frac{7.67\%}{12} = 0.6383\% \] \[ \text{Monthly Rate} = \frac{7.67}{100} \div 12 = 0.006383 \] Now, we can rearrange the payment formula to solve for the principal: \[ \text{Principal} = \frac{\text{Monthly Interest Payment}}{\text{Monthly Rate}} \] Substituting in the known values: \[ \text{Principal} = \frac{738.02}{0.006383} \] Calculating that gives us approximately $115,465.97. This correct calculation aligns with

To determine the amount of the principal for a straight loan, the monthly interest payment can be used along with the interest rate. The formula to calculate the monthly interest payment is:

[ \text{Monthly Interest Payment} = \left( \frac{\text{Annual Interest Rate}}{12} \right) \times \text{Principal} ]

In this case, the monthly interest payment is $738.02, and the annual interest rate is 7.67%, which needs to be converted to a monthly rate:

[ \text{Monthly Rate} = \frac{7.67%}{12} = 0.6383% ]

[ \text{Monthly Rate} = \frac{7.67}{100} \div 12 = 0.006383 ]

Now, we can rearrange the payment formula to solve for the principal:

[ \text{Principal} = \frac{\text{Monthly Interest Payment}}{\text{Monthly Rate}} ]

Substituting in the known values:

[ \text{Principal} = \frac{738.02}{0.006383} ]

Calculating that gives us approximately $115,465.97. This correct calculation aligns with