Barnett/Ziegler/Byleen Finite Mathematics 12e
At the end of the first month, the interest due is $500(0.01) = $5.00.
The amortization payment is divided into two parts, payment of the interest due and reduction of the unpaid balance.
Monthly PaymentInterest DueUnpaid Balance Reduction
$86.27 = $5.00 + $81.27
The unpaid balance for the next month is
Previous Unpaid BalUnpaid Bal ReductionNew Unpaid Bal
$500.00 – $81.27 = $418.73