Question

Round any decimals to the nearest penny.

Secured Unsecured
Credit APR APR
Excellent 4.75% 5.50%
Good 5.00% 5.90%
Average 5.85% 6.75%
Fair 6.40% 7.25%
Poor 7.50% 8.40%
Use the table above for interest rate questions.
If your parents’ credit rating for question 18 had been average, how much is the principal balance at the end of the first month after applying the $925.67 payment?

Correct answers:
89249.80

Answer 1

To find the principal balance at the end of the first month after applying the $925.67 payment, we first need to calculate the interest for the month based on the APR for an average credit rating.

APR for average credit (secured): 5.85%
Monthly interest rate: 5.85% / 12 = 0.4875%

Interest for the month: $100,000 * 0.004875 = $487.50

Subtract the interest from the payment: $925.67 - $487.50 = $438.17

Finally, subtract this remaining payment from the initial principal balance:
$100,000 - $438.17 = $99,561.83

Therefore, the principal balance at the end of the first month after applying the $925.67 payment is $99,561.83.