installment loan principal $1,110 term length 2 1/2 years interest rate 12% monthly payment $43 how much of…

installment loan principal $1,110 term length 2 1/2 years interest rate 12% monthly payment $43 how much of the 26th payment will go to interest if there is an outstanding principal of $209? interest on 26th payment = $? round to the nearest hundredth.

installment loan principal $1,110 term length 2 1/2 years interest rate 12% monthly payment $43 how much of the 26th payment will go to interest if there is an outstanding principal of $209? interest on 26th payment = $? round to the nearest hundredth.

Answer

Answer:

$2.09

Explanation:

Step1: Convert annual rate to monthly rate

The annual interest rate is 12%, so the monthly interest rate $r=\frac{12%}{12}=1% = 0.01$.

Step2: Calculate interest for 26th payment

The interest portion of a loan - payment is calculated based on the outstanding principal. The formula for the interest portion of a payment is $I = P\times r$, where $P$ is the outstanding principal and $r$ is the monthly interest rate. Given $P = 209$ and $r=0.01$, then $I=209\times0.01 = 2.09$.