FinancingInterest_and_payment_calculationsHARD
A payment-option loan has a current balance of $210,000 and a 6.6% annual rate. The borrower's minimum monthly payment this month is $1,050. If any unpaid interest is added to the balance, how much negative amortization occurs this month?
Correct Answer
C) $105.00
Step 1: Monthly interest due = $210,000 × 6.6% ÷ 12 = $1,155. Step 2: Payment shortfall = $1,155 − $1,050 = $105. Because the unpaid interest is added to the balance, the loan negatively amortizes by $105 this month.
Answer Options
A
$52.50B
$175.00C
$105.00D
$1,155.00Why This Is the Correct Answer
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Related Topics & Key Terms
Key Terms:
negative_amortizationpayment_option_loanunpaid_interestloan_balance
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