Abby's monthly payment is $781.60 per month. The principal is $80,000 at a rate of 11½% for 35 years. The principal reduction after the first mortgage payment is $14.93.

Question

Quizplus · Accepted Answer

The principal reduction after the first mortgage payment can be calculated using the formula:
Principal reduction = Monthly payment - Interest portion of monthly payment
Using the given values, we can calculate the interest portion of the monthly payment as:
(11.5/100)/12 * $80,000 = $766.67
So, the principal reduction = $781.60 - $766.67 = $14.93 (rounded to two decimal places). Therefore, the statement is true.

Abby's Monthly Payment Is $781