How much of Shari Larson's next monthly payment will be applied to her mortgage principal, if the balance is $185,500 with an interest rate of 8.5%?

To determine how much of Shari Larson's next monthly payment will go towards her mortgage principal, we first need to calculate her monthly mortgage payment using the loan balance, interest rate, and loan term.

1. Determine the Monthly Interest Rate: The annual interest rate is 8.5%. To find the monthly interest rate, divide by 12:

[

\text{Monthly interest rate} = \frac{8.5%}{12} = \frac{0.085}{12} \approx 0.0070833

]

2. Monthly Payment Calculation: The formula for calculating the monthly payment (PMT) on an amortizing loan is:

[

PMT = P \frac{r(1 + r)^n}{(1 + r)^n - 1}

]

Where:

• (P) is the loan amount ($185,500).

• (r) is the monthly interest rate (0.0070833).

• (n) is the total number of payments (for example, 30 years would be (30 \times 12 = 360) payments).

3. **Principal