The amount of interest you would be paying in Year 2 is: $2,492.62.
<h3>Interest</h3>
First step is to calculate the Equal Monthly Payment
Equal Monthly Payment=P×r×(1+r)^t/(1+r)^t-1
Where:
P=Principal=$36,500
r=Rate=7.7%
t=Time=7 years
Equal Monthly Payment=36,500×0.077×(1+0.077)^7÷(1+0.077)^7-1
Equal Monthly Payment=36,500×0.077×(1.077)^7÷(1.077)^7-1
Equal Monthly Payment=36,500×0.077×1.6807763÷1.6807763-1
Equal Monthly Payment=4,723.82/0.6807763
Equal Monthly Payment=$6,938.875
Second step is to calculate Year 1 Closing balance
Year 1 Closing balance = Beginning balance + Interest - EMI Payment
Year 1 Closing balance= $36,500 +($36,500×7.7%) - $6,938.875
Year 1 Closing balance= $36,500 + $2,810.5 -$6,938.875
Year 1 Closing balance = $32,371.625
Third step is to calculate year 2 interest
Year 2 Interest= $32,371.625×7.7%
Year 2 Interest=$2,492.62
Therefore the amount of interest you would be paying in Year 2 is: $2,492.62.
Learn more about interest here:brainly.com/question/15259578
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