The following formula is a variation of the "compound interest formula", compounded yearly: I = P(1+r)* -P I is the interest you earn/owe P is the amount of money at the beginning (the principal) r is the interest rate as a decimal t is the amount of time (in years) Please note: The "t" is in the exponent position. That means it's raising (1+r) to the power of "t". You can type this in some online calculators by holding shift and pressing the "6" key. That should give you this carrot symbol, ; which means "exponent" Aaron has bought a house using a loan of $180,000, 4% interest. Their monthly mortgage payment is $1000. The taxes and insurance for the house is $270 a month. They make their first mortgage payment after 30 days. Part One How much interest do they owe after 30 days? (Note: You'll have to convert 30 days to years, since the compound interest formula uses "t" for years). Part Two How much of that first monthly payment goes to the principal?