To determine how much of the 20th payment will go toward interest, we need to follow these steps:
1. Determine the Annual Interest Rate: Given as 15% per year.
2. Convert the Annual Interest Rate to a Monthly Interest Rate:
[tex]\[
\text{Monthly Interest Rate} = \frac{\text{Annual Interest Rate}}{12} = \frac{15\%}{12} = 0.15 \div 12 = 0.0125
\][/tex]
or as a percentage:
[tex]\[
0.0125 \times 100 = 1.25\%
\][/tex]
3. Identify the Outstanding Principal at the time of the 20th payment, which is given as \[tex]$850.
4. Calculate the Interest Portion of the 20th Payment:
\[
\text{Interest on 20th Payment} = \text{Outstanding Principal} \times \text{Monthly Interest Rate}
\]
Substituting the given values:
\[
\text{Interest on 20th Payment} = 850 \times 0.0125
\]
\[
\text{Interest on 20th Payment} = 10.625
\]
5. Round the Interest Amount to the Nearest Hundredth:
\[
10.625 \approx 10.62
\]
So, the amount of the 20th payment that will go to interest is \$[/tex]10.62.
