Final answer:
The balance at the beginning of month one is $1125 and the interest for month one is $9.375. The balance at the beginning of month two is $1059.375 and the interest for month two is $8.825.
Step-by-step explanation:
The question asks about the balance and interest over two months for a bank loan of $1200 at 10% interest with a monthly payment of $75.
First, we need to calculate the balance at the beginning of month one. The initial balance is $1200, and the monthly payment is $75. So the new balance is $1200 - $75 = $1125.
To calculate the interest for month one, we multiply the balance at the beginning of the month (which is $1125) by the monthly interest rate (which is 10% divided by 12, or 0.00833). So the interest for month one is $1125 × 0.00833 = $9.375.
Next, we need to calculate the balance at the beginning of month two. The balance at the beginning of month two is the previous balance ($1125) minus the monthly payment ($75), plus the interest for month one ($9.375). So the new balance is $1125 - $75 + $9.375 = $1059.375.
Finally, to calculate the interest for month two, we multiply the balance at the beginning of month two (which is $1059.375) by the monthly interest rate (which is 10% divided by 12, or 0.00833). So the interest for month two is $1059.375 × 0.00833 = $8.825.