Question

You are taking out a $19124 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. $184.93

b. $191.24

c. $231.40

d. $187.33

e. $182.25

Answer 1

Loan Amount = $19,124

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 = 19124, FV = 0, T = 40, I = 0.01]

PMT = $582.43

So,

Principal Payment in Quarter 1 = 582.43 - (0.01)(19124) = $391.19

Principal Due = $18,732.81

Interest Payment in Quarter 2 = 0.01(18732.81) = $187.33

So,

Interest payment in Quarter 2 = $187.33

Please "Like" if you find this useful, and comment if you have any doubts.