Answer:
The amount that Barry would pay in interest for his loan is $15.05.
Step-by-step explanation:
To calculate this, we first calculate the monthly required fixed payment using the formula for calculating loan amortization as follows:
P = (A * (r * (1 + r)^n)) / (((1+r)^n) - 1) .................................... (1)
Where,
P = Monthly required fixed payment = ?
A = Loan amount = $1,000
r = monthly interest rate = 9% / 12 = 0.09 / 12 = 0.0075
n = number of payment months = 3
Substituting all the figures into equation (1), we have:
P = ($1,000 * (0.0075 * (1 + 0.0075)^3)) / (((1 + 0.0075)^3) - 1)
P = $338.35
Therefore, we have:
Total repayment = P * 3 months = $338.35 * 3 = $1,015.05
Interest amount = Total repayment - Loan principal = $1,015.05 - $1,000 = $15.05.
Therefore, the amount that Barry would pay in interest for his loan is $15.05.
