The repayment schedule is for a $1,300 loan at 7.5% for 6 months. What is the amount for interest at payment 5?
2 answers:
Answer: The answer is $2.77.
Step-by-step explanation: Given that we have to pay the loan of $1300 at interest rate of 7.5% in 6 months. According to the table,
Amount for interest in payment 1 = $8.13,
Amount of interest in payment 2 = $6.79
and
Amount of interest in payment 3 = $5.45.
We can see here that the difference in the amounts to be paid in consecutive months will be same, i.e., the payments will form an arithmetic progression (A.P.).
The common difference = 8.13-6.79=6.79-5.45=1.34.
Therefore, amount of interest in payment 4 = $(5.45-1.34) = $4.11
and amount of interest in payment 5 = $(4.11-1.34) = $2.77.
Please see the attached modified table.
Thus, the answer is $2.77.
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