Statue Builders, Inc. took out a loan for $256,110 that has to be repaid in 10 equal annual installments. The APR on the loan is 6.65 percent. How much of the second payment is interest?
| Step - 1 : Computation of annual payment | ||||||
| We have to use financial calculator to solve this | ||||||
| Put in calculator | ||||||
| FV | 0 | |||||
| PV | -256110 | |||||
| I | 6.65% | |||||
| N | 10 | |||||
| compute PMT | $35,876.60 | |||||
| Step 2 : Computation of interest in 2nd payment | ||||||
| we have to prepare partial amortization table | ||||||
| i | ii=i*6.65% | iii | iv=i+ii-iii | |||
| Period | Beginning | Interest | Installment | Closing balance | ||
| 1 | $ 256,110.00 | $ 17,031.32 | $ 35,876.60 | $ 237,264.72 | ||
| 2 | $ 237,264.72 | $ 15,778.10 | $ 35,876.60 | $ 217,166.22 | ||
| ans = | $ 15,778.10 | |||||
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