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Borrowed $6000.00 at 12.75% compouned monthly and making quarterly of $500.00.
How much of the 11th payment is interest?

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Aug 13, 2010
financial math: periodic payments
by: Staff

The question:

Borrowed $6000.00 at 12.75% compounded monthly and making quarterly of $500.00.
How much of the 11th payment is interest?

The answer:

There are standard formulas you could use, but it does get a bit complicated.

I recommend you use an excel spread sheet. Use the built in functions calculate what happens each quarter (every three months).

financial math - 2010-08-12


interest rate
interest per year i
interest per year 12.75%
interest per month 1.06%
in standard format of interest per month 0.010625


What the numbers represent (left to right):

4th number = outstanding balance at beginning of quarter
5th number = interest in $ charged during quarter
6th number = outstanding balance after interest applied
7th number = payment of $500
8th number = outstanding balance after payment


1st quarter.....1.....3.....6000+193.289228=6193.289228..-..500=5693.289228

2nd quarter.....2.....6.....5693.289+183.4086=5876.698..-..500=5376.698

3rd quarter.....3.....9.....5376.698+173.2096=5549.907..-..500=5049.907

4th quarter.....4.....12.....5049.907+162.6821=5212.59..-..500=4712.59

5th quarter.....5.....15.....4712.59+151.8155=4864.405..-..500=4364.405

6th quarter.....6.....18.....4364.405+140.5987=4505.004..-..500=4005.004

7th quarter.....7.....21.....4005.004+129.0207=4134.024..-..500=3634.024

8th quarter.....8.....24.....3634.024+117.0696=3751.094..-..500=3251.094

9th quarter.....9.....27.....3251.094+104.7336=3355.828..-..500=2855.828

10th quarter.....10.....30.....2855.828+92.00012=2947.828..-..500=2447.828

11th quarter.....11.....33.....2447.828+78.85646=2526.684..-..500=2026.684


The answer to your question is: The interest component of the 11th payment is $78.86




Thanks for writing.


Staff
www.solving-math-problems.com




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