Answer:
$211.18
Step-by-step explanation:
Monthly payments are computed using the amortization formula:
A = P(r/12)/(1 -(1 +r/12)^(-12·t))
= $10,900(.04/12)/(1 -(1 +.04/12)^(-12·4)) ≈ $246.11
<u>First payment</u>
The monthly interest rate is 1/3%, so the interest due is ...
$10,900 × 1/300 = $36.33
The loan balance after the first payment is ...
$10,900 +36.33 -246.11 = $10,690.22
<u>Second payment</u>
The interest due is ...
$10,690.22 × 1/300 = $35.63
The new balance after the payment is ...
$10,690.22 +35.63 -246.11 = $10,479.74
<u>Third payment</u>
The interest due is ...
$10,479.74 × 1/300 = $34.93
The amount of the payment that will be applied to principal is the difference between the payment amount and the interest charge:
amount to principal = $246.11 -34.93 = $211.18
