Test an extra principal payment
See this course’s project requirements
A checked amortization schedule and loan-offer comparison separating cash received, interest, fees, total cost and early-payment rules.
Keep your working files in your own notebook or software. Save a private description, checklist, and work link in My Proof.
What to include
- A loan-proceeds comparison with a funding-gap calculation and disclosure questions.
- A checked one-period payment allocation and principal roll-forward.
- A four-period amortization table with final payoff and total-interest checks.
- A term/cost/affordability scorecard for comparable loan offers.
- An extra-payment scenario with principal application and prepayment questions.
- A borrowing-or-wait decision brief with a savings path, cost and review trigger.
Review and revise
Use these criteria to check your work and choose what to improve.
- All supplied records reconcile and the decision uses the named case rules.
- Calculations show units, intermediate values and a second check.
- Changed-input practice revises the affected result and identifies uncertainty.
- The final project combines six lesson records, separates fictional assumptions from current rules, and states a supported next step.
Want more background?
The idea in everyday life
This is an original fictional practice case. No account, payment, personal record or outside participation is required. Month 2 opens at $750, 1% interest, regular payment $260. An extra $100 is explicitly applied to principal at the same month-end; no prepayment fee.
Extra payments help only as the contract credits them; verify principal application and any penalties.
Test an extra principal payment — worked practice
Extra payments help only as the contract credits them; verify principal application and any penalties.
Use paper or a local table; label all amounts as fictional USD unless the case names another unit. Month 2 opens at $750, 1% interest, regular payment $260. An extra $100 is explicitly applied to principal at the same month-end; no prepayment fee.
Extra-payment allocation inputs
Paste at A1.
| AInput or record | BSupplied value |
|---|---|
| Month-2 opening principal USD | 750 |
| Monthly interest decimal | 0.01 |
| Regular month-end payment USD | 260 |
| Extra principal at same date USD | 100 |
| Prepayment fee USD | 0 |
Copy as plain text
1. Step 1: Calculate interest before the stated month-end payments
Calculate interest before the stated month-end payments.
You should see: $7.50.
Extra payments help only as the contract credits them; verify principal application and any penalties.
2. Step 2: Calculate closing debt with the regular payment
Calculate closing debt with the regular payment.
You should see: $497.50.
Keep this intermediate result so the final decision can be checked.
3. Step 3: Apply the extra principal amount once
Apply the extra principal amount once.
You should see: $397.50.
Keep this intermediate result so the final decision can be checked.
4. Step 4: Compare next-period interest under the same 1% rate
Compare next-period interest under the same 1% rate.
You should see: $3.98 after rounding instead of $4.98: $1 lower for that period.
Keep this intermediate result so the final decision can be checked.
What to finish
An extra-payment scenario with principal application and prepayment questions.
Watch for this
Assuming a scheduled extra payment is always credited immediately to principal.
How can I tell I understand it?
Test a specified extra-principal payment and compare the following interest period on a new supplied case, with a visible intermediate check and no unsupported real-world promise.
Quick knowledge check
Answer all 3 questions. Get at least 2 right and the lesson completes automatically.
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Answer all 3 questions above and get at least 2 right. You can review the explanations and try again.
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Source & access notes · checked 2026-10-01
Official page opened/read during Money expansion authoring; checked the relevant concept and access state. These sources do not establish funding eligibility.
Access: Readable official webpage inspected with the web reader on 2026-10-01. No interactive-tool operation is claimed.
Reuse: Original fictional practice, questions and calculations; paraphrased concepts with a source link. No source exercise copied.
Source & access notes · checked 2026-10-01
Official page opened/read during Money expansion authoring; checked the relevant concept and access state. These sources do not establish funding eligibility.
Access: Readable official webpage inspected with the web reader on 2026-10-01. No interactive-tool operation is claimed.
Reuse: Original fictional practice, questions and calculations; paraphrased concepts with a source link. No source exercise copied.
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