Question

The following table shows a portion of a three-year amortization schedule.
3-year amortization schedule. Loan amount or principal: 12,240 dollars. Interest rate on loan: 8.71 percent. A 5-column table with 7 rows. Column 1 is labeled Month with entries 13, 14, 15, 16, 17, 18, 19. Column 2 is labeled payment and all entries are 387 dollars and 58 cents. Column 3 is labeled Principal with entries 325.82, 328.19, 330.57, 332.97, 335.38, 337.82, 340.27. Column 4 is labeled Interest with entries 61.76, 59.39, 57.01, 54.61, 52.19, 49.76, 47.31. Column 5 is labeled Balance with entries 8,182.71, 7,854.52, 7,523.95, 7,190.99, 6,855.60, 6,517.78, 6,177.51.
Use the information in the table to decide which of the following statements is true.
a.
The payment amount changes each month.
b.
The amount applied to the principal is decreasing each month.
c.
The amount applied to the principal is increasing each month.
d.
The amount applied to interest is increasing each month.

Answer 1

The amount applied to the principal is decreasing each month.

Answer: Option B.

Explanation:

The amount borrowed (such as the face value of a debt security), or the part of the amount borrowed which remains unpaid (excluding interest), here also called principal.

The principal of a loan is the amount borrowed. Interest is calculated on the principal. In a loan amortization schedule, the principal and interest are separated, so you can see which part of your monthly payment goes to paying off the principal, and which part is used to pay interest.

Answer 2

Answer:

the answer is c. The amount applied to the principal is increasing each month i just took the test

Step-by-step explanation: