Answer:
$277.61 is applies to the principal balance of the second payment.
Explanation:
Loan is provided to purchase any asset and pay it back on easy installment with some interest amount yearly.
Use following formula to calculate monthly installment:
P = (PV x r) / ( 1 - ( 1 + r )^-n )
P = ( $150000 x 7.35%/12 ) / ( 1 - ( 1 + 7.35% / 12 )^-240
P = 1194.669
1st payment
Payment = $1,194.67
Interest = 150,000 x 7.35/12 = $918.75
Principal Payment = $1,194.67 - $918.75 = $275.92
Outstanding balance = $150,000 - $275.92 = 149,724.08
2nd Payment
Payment = $1,194.67
Interest = 149,724.08 x 7.35/12 = $917.06
Principal Payment = $1,194.67 - $917.06 = $277.61
