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A personal property loan is made in the amount of $5,687. The interest rate is 10%...

A personal property loan is made in the amount of $5,687. The interest rate is 10% and equal payments are made quarterly over 8 years. What is the amount of interest for the 4th payment? SHOW ALL WORK!!   

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Answer #1

The amount of interest for the 4th payment is calculated using IPMT function in Excel :

rate = 10% / 4   (converting annual rate into quarterly rate - there are 4 quarters per year)

per = 4 (we are calculating the interest amount in the 4th payment)

nper = 8 * 4 (8 year loan with 4 quarterly payments each year)

pv = 5687 (loan amount)

IPMT is calculated to be $133.09

The amount of interest for the 4th payment is  $133.09 as calculated above

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