Question

If you pay $1,500.00 toward the first month’s payment in problem #3, ($792.50) how much is applied toward the principal?
Responses

$549.00
$549.00 - no response given

$1,420.75
$1,420.75 - no response given

$839.58
$839.58 - no response given

$707.50
$707.50 - no response given

Answer 1

$1,420.75

Explanation:
First-month interest = $79.25, so the scheduled principal portion = $792.50 − $79.25 = $713.25.
You paid $1,500, which is $707.50 more than $792.50, and that extra goes to principal.
Total applied to principal = $713.25 + $707.50 = $1,420.75.