Question

installment loan
principal $2,240
term length 2 ½ years
interest rate 15%
monthly payment $90
how much of the 11th payment will go to principal if there is an outstanding principal of $1,584?
interest on 11th payment = $19.80
principal on 11th payment = $?

Explanation:

Step1: Recall the relationship between monthly payment, interest, and principal payment.

The principal portion of a monthly payment is calculated as the monthly payment minus the interest portion of that payment. So, we use the formula: Principal Payment = Monthly Payment - Interest Payment.

Step2: Substitute the given values.

We know the monthly payment is $90 and the interest on the 11th payment is $19.80. Substituting these values into the formula: Principal Payment = $90 - $19.80.

Step3: Calculate the result.

$90 - $19.80 = $70.20.

Answer:

$70.20