Question

Jacinta borrowed sh. 100,000 from her cooperative society. She pays 1% interest of the outstanding balance every month. If she pays sh. 10,000 plus interest every month, how much money does she pay to service the whole loan?

Answer 1

The amount of money that Jacinta pays to service the whole loan as interest is sh. 5,899.

What is interest?

Interest is the finance charge that a borrowers incurs to service a loan.

Interest is based on the outstanding balance at the end of the payment period.

Data and Calculations:

Principal loan = sh. 100,000

Interest on outstanding balance = 1%

Monthly payment of principal and interest = sh. 10,000

Period of repayment = Monthly

Amortization Schedule:

                      Beginning     Interest   Payment   Ending Balance

1st month    sh. 100,000    sh. 1,000    sh. 10,000    sh. 91,000

2nd month    sh. 91,000       sh. 910    sh. 10,000     sh. 81,910

3rd month      sh. 81,910        sh.819    sh. 10,000    sh. 72,729

4th month    sh. 72,729       sh. 727    sh. 10,000    sh. 63,456

5th month   sh. 63,456       sh. 636    sh. 10,000    sh. 54,092

6th month   sh. 54,092       sh. 541     sh. 10,000    sh. 44,633

7th month   sh. 44,633       sh. 446    sh. 10,000    sh. 35,079

8th month  sh. 35,079        sh. 351     sh. 10,000    sh. 25,430

9th month  sh. 25,430       sh. 254     sh. 10,000    sh. 15,684

10th month sh. 15,684        sh. 157     sh. 10,000      sh. 5,841

11th month    sh. 5,841         sh. 58      sh. 5,899       sh. 0

Total interest paid =       sh. 5,899

Thus, based on the payment schedule above, the amount of money that Jacinta pays to service the whole loan as interest is sh. 5,899.

Learn more about loan interests at brainly.com/question/24576997

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