You receive a call from "Credit Services." The person on the line compliments you on your great credit history and also informs
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Interest capitalization refers to the addition of interest earned to the principal amount, Roderigo will pay $7353.80 in interest to finish the amount of the loan.
<h3>What is interest capitalization?</h3>Interest capitalization passes when owed interest is added to the principal amount of the loan. Interest is then charged on that advanced principal balance.
<u>Computation </u><u>of the amount of interest:</u>
Given,
Principal(P) = $8,575,
Rate(i) = 7.1%
Compounded Monthly:
Time period (n):
Now, apply the given values in the formula of compound interest(CI):
Then apply the formula of EMI by taking $11,381.94 as a principal, we have,
Here,
Now, the total payment made in 120 months would be:
Hence, Interest paid will be:
Therefore, the total amount of interest that would be paid by Roderigo is $7,353.80.
Learn more about interest capitalization, refer to:
Answer:
Debit: $300
Credit: $300
Explanation:
See attached picture for explanation.
