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Assume a loan balance of $174,000, a monthly payment of $1,395, and an interest rate of 8%. On next month's payment, how much of the $1,395 will be applied to principal?

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Given a loan balance of $174,000 and an interest rate of 8%, the interest due for the next months payment is given by


(0.08(174,000))/(12) \right)= (13,920)/(12) =\$1,160

Therefore, the amount out of the monthly payment of $1,395 that will be applied to the principal is $1,395 - $1,160 = $235.
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