Question

Adventure Travel signed a 14%, 10-year note for $151,000. The company paid an installment of $2100 for the first month. After the first payment, what is the principal balance

Answer 1

Answer:

$147,138.34

Explanation:

Interest Expense for 1 month = $151,000 * 14% * (1/12)

Interest Expense for 1 month = $151,000 * 0.14 * 0.083333

Interest Expense for 1 month = $1761.65962

Interest Expense for 1 month = $1,761.66

Principal amount = Total payment + Interest Expense for 1 month

Principal amount = $2,100 + $1,761.66

Principal amount = $3,861.66

Principal balance = $151,000 - $3,861.66

Principal balance = $147,138.34