Round to the nearest penny.
Your friend wants to borrow $1,137.45 from you to pay off a credit card that charges a 14.7% APR. You agree to the loan but require your friend to pay you interest of 3.6% APR on the loan and your friend agrees.
Your friend pays you $200.00 at the end of the first month. How much goes toward the principa
The monthly interest on the loan is calculated as (14.7% / 12) = 1.225% per month.
The interest on the loan for the first month is $1,137.45 * 1.225% = $13.9230375.
Therefore, the amount that goes toward the principal is $200.00 - $13.9230375 = $186.08.
Rounded to the nearest penny, your friend pays $186.08 toward the principal in the first month.