Question

Allstar Company signed a $100,000 mortgage on July 1, 2018 for the purchase of their new garage building. The mortgage entailed equal monthly payments of $2,800 at the end of each month. The interest rate is 6.0% per year.  How much interest expense will be paid on August 31, 2018? (Round your answer to the nearest whole dollar.)

Answer 1

· Interest Expense that will be paid on Aug 31, 2018 = $ 489

· Working for above answer

Date	Principal balance	Installment amount	Interest part	Principal part	Ending Principal balance
01-Jul-18					$100,000
31-Jul	$100,000	$2,800	$500	$2,300	$97,700
31-Aug-18	$97,700	$2,800	$489	$2,311	$95,389

Date	Principal balance	Installment amount	Interest part	Principal part	Ending Principal balance
01-Jul-18					100000
31-Jul	$100,000	2800	=100000*6%*1/12	=2800-500	=100000-2300
31-Aug-18	$97,700	2800	=97700*6%*1/12	=2800-489	=97700-2311