Michelle would like to know how much of her loan payments will go toward interest. She has a $124,500 loan with a 5.9% interest rate that is compounded monthly. The loan has a term of 10 years. Calculate the total amount of interest that Michelle will pay over the course of the loan.

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   $40,615.20

Step-by-step explanation:

The amortization formula will tell you Michelle's monthly payment.

  A = P(r/12)/(1 -(1 +r/12)^(-12t)) . . . . loan value P at interest rate r for t years

  A = $124,500(0.059/12)/(1 -(1 +0.059/12)^(-12·10)) ≈ $1375.96

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The total of Michelle's 120 monthly payments is ...

  12 × $1375.96 = $165,115.20

This amount pays both principal and interest, so the amount of interest she pays is ...

  $165,115.20 -124,500 = $40,615.20

Michelle will pay $40,615.20 in interest over the course of the loan.

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A calculator or spreadsheet can figure this quickly.

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