Question

A $10,000 loan is being paid off by annual payments of $2,000 plus a smaller final payment. If the effective annual rate of interest is 15%, and the first payment is made one year after the time of the loan, find the amount of interest, $X, contained in the fifth payment.

Answer 1

fifth payment $2,000

interests paid $1,125.50, principal paid $874.50

principal's balance $6,628.81

Step-by-step explanation:

first payment $2,000

interests paid $1,500, principal paid $500

principal's balance $9,500

second payment $2,000

interests paid $1,425, principal paid $575

principal's balance $8,925

third payment $2,000

interests paid $1,338.75, principal paid $661.25

principal's balance $8,263.75

fourth payment $2,000

interests paid $1,239.56, principal paid $760.44

principal's balance $7,503.31

fifth payment $2,000

interests paid $1,125.50, principal paid $874.50

principal's balance $6,628.81