Question

Going places adventure travel signed a 14%, 10-year note for $152000. The company paid an installment of $2200 for the first month. After the first payment, what is the principle balance?

Answer 1

After the first payment, the principle balance is

$ 1,51,573.33

Working:

# 1

Interest for the first month

=

Beginning note value * Interest rate

=

$ 1,52,000.00

*

14%

*1/12

=

$       1,773.33

# 2

First month's Installment

=

$       2,200.00

Less interest

$       1,773.33

Principal repayment

$           426.67

# 3

After the first payment, the principle balance

=

Beginning principal balance - Reduction in principal from first month's installment payment

=

$ 1,52,000.00

-

$ 426.67

=

$ 1,51,573.33