CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

Given that a 6%, 15-year, $100,000 mortgage has a payment of $843.86 per month, what is the amount of the interest component of the first monthly payment?

A. $400.00
B. $500.00
C. $600.00
Correct Answer: B

Interest component = monthly rate x outstanding balance

User Contributed Comments 5

User Comment
pangar04 Can someone explain how you get this answer? sorry im confused
abeeman924 Simple interest payment calculation just use 12 months instead of semi-annual.

$100,000 x 0.06 = $6,000
$6,000/12 (months = $500 worth of interest per month on your mortgage payment

The other $343.86 out of the total $843.86 is a return of principal.
Yrazzaq88 0.06 / 12 = 0.005
0.005 x 100,000 = $500 per month
mbowa Thanks abeeman924, i was confused as well
lal191561 nice questions
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