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5. You owe $1,500 on a credit card with a 14.5% APR. The minimum payment is $80. How much goes toward principal if you make the minimum payment at the end of the first month?

Amount toward principal:

please help and explain.​



Answer :

sqdancefan

Answer:

  $61.87

Step-by-step explanation:

You want to know the amount to principal of a payment of $80 on a balance of $1500 if the APR is 14.5%.

Interest

The interest due is found from ...

  I = Prt

where P is the outstanding balance, r is the annual rate, and t = 1/12 = one month of a year.

  I = $1500·0.145·1/12 = $18.125 ≈ $18.13

Principal

After the interest is paid, the remainder of the payment goes toward the principal:

  $80 -18.13 = $61.87

The amount toward principal is $61.87.

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Additional comment

Paying $80 per month, it will take 22 months to pay off the balance. You will have paid about $212 in interest.

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