The portion of the second monthly payment (made on January 31,Year 2)that represents repayment of principal is:
A)$400.
B)$404.
C)$2,400.
D)$1,996.

Question

Quizplus · Accepted Answer

The portion of the second monthly payment that represents repayment of principal increases slightly with each payment due to the decreasing interest portion as the principal balance decreases. Given the options and the typical structure of such payments (assuming a standard amortizing loan), the correct answer is $404, which is slightly higher than a round number like $400, indicating the effect of decreasing interest and thus more of the payment going towards the principal.

The Portion of the Second Monthly Payment (Made on January