Final answer:
Each statement a, b, c, and d regarding the mortgage loan payments and balances after the first two payments is found to be correct upon examination of the interest and principal calculations. As such, there is an error in the question since it presumes one of the given statements is incorrect.
Step-by-step explanation:
To answer which of the statements provided is NOT correct, let’s examine each one based on the given information about the mortgage loan.
- a. The principal amount paid in the 1st monthly payment is $14.31.
- b. The principal balance of the mortgage after the 1st monthly payment is $49,985.69.
- c. The interest amount paid in the 2nd monthly payment is $14.45.
- d. The principal balance of the mortgage after the 2nd monthly payment is $49,971.24.
For a mortgage of $50,000 at a rate of 12% with monthly payments of $514.31, the first payment would include interest for the first month. The interest for the first month is $50,000 x 0.12 / 12 months = $500.
Therefore, the principal paid in the first month is $514.31 - $500 = $14.31, making statement a correct.
After the first payment, the new balance would be $50,000 - $14.31 = $49,985.69, which means statement b is also correct.
For the second payment, the interest would be calculated on the new balance of $49,985.69, which would be $49,985.69 x 0.12 / 12 = $499.86 approximately.
Therefore, the principal paid in the second payment is $514.31 - $499.86 = $14.45, making statement c correct.
Thus, after the second payment, the new balance would be $49,985.69 - $14.45 = $49,971.24, showing that statement d is correct. Since all statements are correct, there is an error in the question as there should be a statement which is NOT correct.