Adventure Travel signed a 14%, 10-year note for $152,000. The company paid an installment of $2,200 for the first month. After the first payment, what is the principal balance? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

The principal balance is $151,573

Explanation:

For computing the principal balance, we need the following calculation which is shown below:

1. First we have to compute the 1 month interest payment which equals to

= Note amount * rate * 1 month : total months in a year

= $152,000 * 14% * 1 : 12

= 1773.33

2. Now deduct the first month interest from installment amount which equals to

= Installment amount - Interest amount

= $2,200 - $1773.33

= $426.67

3. Now subtract step 2 amount from notes amount which equals to

= Notes amount - principal amount

= $152,000 - $426.67

= $151,573.33

Hence, the principal balance is $151,573