1. Using an amortization factor of 4.77415 per $1,000 (30 years at 4%), what is the monthly principal and interest payment on a $250,000 loan?
Answer & explanation
Answer: D. $250,000 / $1,000 = 250; 250 x 4.77415 = $1,193.54.
agency
principal
In agency law, the person who hires an agent and authorizes the agent to act on their behalf, also called the client. In a listing, the seller is usually the principal, and in a buyer agency relationship the buyer is the principal. The agent owes the principal fiduciary duties. In finance, principal also refers to the amount borrowed, a separate meaning exams may test.
- Exam tip
- Principal and client are the same; customer is the party the agent does not represent. Read carefully for the finance meaning of principal as the loan balance.
- Example
- A homeowner signs an exclusive right to sell listing with a broker; the homeowner is the principal and the broker is the agent.
Related terms & state variants
Sources
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Last verified: 2026-10-23