Question

Cathleen Brooks obtained an 18 month loan of $3,200. The interest rate is 15% Her monthly payment is $199.68. The balance of the loan after 6 payments
is $2,341.45.

a. What is the interest for the first payment?


b. What is the interest for the seventh payment?

Answer 1

a. The interest for the first payment is $40.

b. The interest for the seventh payment is $29.27.

What is interest?

In financial accounting and management, interest refers to the finance charge for obtaining or giving a loan or credit.

The interest payment or revenue is based on the interest rate applied to the principal or loan balance.

Data and Calculations:

Loan = $3,200

Monthly payment = $199.68

Interest rate = 15%

Loan balance after 6 payments = $2,341.45

Interest for the first payment = $40 ($3,200 x 15% x 1/12)

Interest for the seventh payment = $29.27 ($2,341.45 x 15% x 1/12)

Thus, while the interest for the first payment is $40, the interest for the seventh payment is $29.27.

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