i multiplied 12,000.00 by .11 (for 11% interest)... i got 1320.00
next i multiplied that by 4 years which is 5280.00
5280 .00 divided by 48 months is 110.00 - but the principal remains, correct ? (12,000 divided by 48 is 250.00 plus the 110.00 in interest give me 360.00 - so why is the correct answer 310.14?
what did i do wrong? No, you obligation an amortization schedule (or some calculators can do amortizations). This is because you are paying bad a bit of the principal every month from the first payment, so respectively bit of principal paid collects no interest for the rest of the loan occupancy.

Your way impute interest on the full amount for the full term of the loan as if it be all one final transfer of funds at the end of the loan possession. Then you tried to divy it up into monthly payments. Totally erroneous assumptions used in solving this problem.

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because for only one month do you owe the 12K -- subsequent month the interest is on a lesser amount!! you can type "how to divide money into yahoo and it will give you the formula!

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Answers:    The correct answer is $310.14, I ran this through my ADP program that I use for motor deals and it come up $310.14 to the penny.
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