CAS Real Estate Principles Practice Test – Complete 45-Hour Course Prep 2026

To determine how much of the first monthly payment on a $750,000 loan at a 5.75% interest rate is allocated to interest, it's essential to first calculate the monthly interest rate and then apply it to the loan amount.

The annual interest rate is 5.75%. To find the monthly interest rate, divide by 12 (the number of months in a year):

Monthly interest rate = 5.75% annual rate / 12 = 0.4791667% per month.

To convert this percentage to a decimal for the calculation, divide by 100:

0.4791667% = 0.004791667.

Now, multiply this monthly interest rate by the loan amount of $750,000 to determine the interest amount for the first month:

Interest for the first month = $750,000 * 0.004791667 = $3,593.75.

This calculation shows that $3,593.75 is allocated to interest from the first monthly payment, confirming that this amount is indeed correct. The remaining portion of the payment would go towards the principal, but the question specifically asks for the interest allocation, making this calculation the focal point.