Question

You have amortization schedule to pay back $25,000 with 6% for 10 payments (Your first payment is one period from today. For the 3rd payment, what is your principal payments amount?

a. 2131
b. 2141
c. 2151
d. 2161

Answer 1

Without the full amortization schedule for the loan, it isn't possible to accurately calculate the principal payment for the 3rd payment. Generally, each payment reduces the interest first, then the principal, with a progressively larger portion of subsequent payments going toward the principal.

Step-by-step explanation:

To calculate the principal payment amount for the 3rd payment of an amortization schedule, you would need to know the previous payments and interest rates to determine how much of the payment went toward the principal and how much went toward interest. Unfortunately, without the full amortization schedule or the initial payment amounts, we cannot provide an exact answer. However, typically, each payment is split into two parts: the interest payment, which is the remaining balance multiplied by the interest rate, and the principal payment, which is the total payment minus the interest payment.

It is intended with each subsequent payment a larger portion goes towards the principal and a smaller portion towards the interest until the loan is paid off. The amortization schedule is crucial for calculating such amounts and determining the impact of different payment rates on the overall term and cost of the loan.