Trek Company signed a 9%,10-year note for $155,000.The company paid $2900 as the instalment for the first month.After the first payment,what is the updated principal balance? (Round to the nearest dollar. )
A)$153,837
B)$157,900
C)$153,263
D)$152,100

Question

Quizplus · Accepted Answer

First, we need to find the amount of the payment that goes towards the principal:

Payment = Interest + Principal
$2900 = 0.09/12 x $155,000 + Principal
$2900 = $1162.50 + Principal
Principal = $1737.50

To find the updated principal balance, we need to subtract the principal portion of the first payment from the original principal balance:

Updated Principal Balance = Original Principal Balance - Principal Payment
Updated Principal Balance = $155,000 - $1737.50
Updated Principal Balance = $153,262.50

Rounding to the nearest dollar, the answer is C: $153,263.

Trek Company Signed a 9%,10-Year Note for $155,000