Use the information in the table to decide which of the following statements is true.
a. The interest amount increases each month.
b. The principal amount decreases each month.
c. The payment amount changes each month.
d. The payment amount each month stays the same.
Answer (1)
Analyze the interest amount: It decreases each month.
Analyze the principal amount: It increases each month.
Analyze the payment amount: It stays the same each month.
Conclude that the payment amount each month stays the same, so the answer is D .
Explanation
Understanding the Problem We are given a table with data about monthly payments, principal, interest, and remaining balance. We need to determine which statement is true based on the data.
Analyzing the Statements Let's analyze each statement:
Statement a: The interest amount increases each month. Looking at the table, the interest amounts are $25.32 , $23.72 , and $22.10 . The interest amount decreases each month, so this statement is false.
Statement b: The principal amount decreases each month. Looking at the table, the principal amounts are $216.01 , $217.61 , and $219.22 . The principal amount increases each month, so this statement is false.
Statement c: The payment amount changes each month. Looking at the table, the payment amounts are $241.32 , $241.32 , and $241.32 . The payment amount stays the same each month, so this statement is false.
Statement d: The payment amount each month stays the same. Looking at the table, the payment amounts are $241.32 , $241.32 , and $241.32 . The payment amount stays the same each month, so this statement is true.
Conclusion Based on the analysis, the only true statement is that the payment amount each month stays the same.
Examples
Understanding loan payments helps in managing personal finances. For example, when you take out a loan for a car or a house, you make monthly payments. Each payment consists of principal and interest. The principal is the amount you borrowed, and the interest is the cost of borrowing the money. As you make payments, the principal decreases, and the interest decreases as well. Knowing how these amounts change over time helps you understand the total cost of the loan and plan your budget effectively.
