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4 January, 16:53

Borrower Kathy has a starting balance of $150,000 at the beginning of January. She is being charged at 3.25% interest. Her total monthly payment for combined principal and interest is $640.50. How much of the first payment is the principal?

1) $640.50

2) $844.64

3) $406.25

4) $234.25

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Answers (1)
  1. 4 January, 17:40
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    4) $234.25

    Explanation:

    First, we have to find out the monthly interest payment which is shown below:

    = (Starting balance of January month * interest rate) : total number of years in a year

    = ($150,000 * 3.25%) : 12 months

    = $406.25

    The total monthly payments is $640.50

    So, the first payment would be

    = Total monthly payments - monthly interest payment

    = $640.50 - $406.25

    = $234.25
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