Question

Shel bought a $6,000 desk based on her income she can only afford to pay 600 per month The charge on the unpaid balance is 2% each month Calculate the balance outstanding at the end of month 2

Answer 1

$5,030.40

Explanation:

The balance outstanding at the end of any month is the due amount after adjusting for interest and loan repayment amount. The amount outstanding can be calculated as:

First month

Due amount = $6,000

Interest at 2% = $6,000*2% = $120

Loan repayment = $600

Reduction in balance = $600 - $120 = $480

Balance remaining = $6,000 - $480 = $5,520

Second month

Due amount = $5,520

Interest at 2% = $5,520*2% = $110.4

Loan repayment = $600

Reduction in balance = $600 - $110.4 = $489.60

Balance remaining = $5,520 - $489.60 = $5030.40

Hence, the balance outstanding at the end of month 2 is $5,030.40