Question

The following table shows a portion of a three-year amortization schedule.
3-year amortization schedule. Loan amount or principal: 12,240 dollars. Interest rate on loan: 8.71 percent. A 5-column table with 7 rows. Column 1 is labeled Month with entries 13, 14, 15, 16, 17, 18, 19. Column 2 is labeled payment and all entries are 387 dollars and 58 cents. Column 3 is labeled Principal with entries 325.82, 328.19, 330.57, 332.97, 335.38, 337.82, 340.27. Column 4 is labeled Interest with entries 61.76, 59.39, 57.01, 54.61, 52.19, 49.76, 47.31. Column 5 is labeled Balance with entries 8,182.71, 7,854.52, 7,523.95, 7,190.99, 6,855.60, 6,517.78, 6,177.51.
Use the information in the table to decide which of the following statements is true.
a.
The payment amount changes each month.
b.
The amount applied to the principal is decreasing each month.
c.
The amount applied to the principal is increasing each month.
d.
The amount applied to interest is increasing each month.



Please select the best answer from the choices provided


A
B
C
D

Answer 1

C

The principal column values (325.82, 328.19, 330.57, ...) increase each month, while the payment is constant and the interest portion is decreasing.