Question

# You are taking out a \$11258 loan. It will be amortized with fixed payments over 10...

You are taking out a \$11258 loan. It will be amortized with fixed payments over 10 years. It is to be paid quarterly and the APR is 4%.

What is the interest payment on the loan in the second quarter?

Select one:

a. \$112.58

b. \$107.29

c. \$110.28

d. \$108.86

e. \$136.22

Loan Amount = \$11,258

Time Period = 10 years

Interest Rate = 4% quarterly

Loan has quarterly Payments,

So,

Period = 4*10 = 40

Interest Rate = 1% per quarter

Calculating Quarterly Payment,

Using TVM Calculation,

PMT = [PV = 11258, FV = 0, T = 40, I = 0.01]

PMT = \$342.87

So,

Principal Payment in Quarter 1 = 342.87 - (0.01)(11258) = \$230.29

Principal Due = \$11,027.71

Interest Payment in Quarter 2 = 0.01(11027.71) = \$110.28

So,

Interest payment in Quarter 2 = \$110.28

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