Trek Company signed a 5 10year note for 150000 The company p

Trek Company signed a 5%, 10-year note for $150,000. The company paid $1,975 as the installment for the first month. What portion of the first monthly payment will be applied to the loan principal?

Solution

Calculate first monthly payment will be applied to loan principal :

First month interest = 150000*5%*1/12 = 625

Principal applied in first installment = 1975-625 = 1350