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\begin{tabular}{|l|r|}
\hline \multicolumn{2}{|c|}{ Installment Loan } \\
\hline Principal & [tex]$\$[/tex] 2,080[tex]$ \\
\hline Term Length & 2 years \\
\hline Interest Rate & $[/tex]9\%[tex]$ \\
\hline Monthly Payment & $[/tex]\[tex]$ 95$[/tex] \\
\hline
\end{tabular}

How much of the 14th payment will go to the principal if there is an outstanding principal of [tex]$\$[/tex] 1,000[tex]$?

Interest on the $[/tex]14^{\text{th}}[tex]$ payment $[/tex]= \[tex]$ 7.50$[/tex]

Principal on the [tex]$14^{\text{th}}$[/tex] payment [tex]$= \text{?}$[/tex]

Round to the nearest hundredth.



Answer :

GinnyAnswer
To determine how much of the 14th payment will go to the principal, we need to follow these steps:

1. Understand the monthly payment and the interest portion:
- The monthly payment is [tex]$95. - The interest portion of the 14th payment is $[/tex]7.50.

2. Calculate the portion of the 14th payment that goes toward the principal:
- The total monthly payment is divided into the interest part and the principal part.
- Therefore, the part of the payment that goes towards the principal can be found by subtracting the interest part from the total monthly payment.

3. Perform the subtraction:
- Monthly payment: [tex]$95 - Interest on 14th payment: $[/tex]7.50
- Principal on 14th payment = Monthly payment - Interest on 14th payment
- Principal on 14th payment = [tex]$95 - $[/tex]7.50

4. Calculate the result:
- Principal on 14th payment = [tex]$95 - $[/tex]7.50 = [tex]$87.50 So, the amount of the 14th payment that will go toward the principal is $[/tex]87.50.