A loan is to be repaid over 30 years, with month-end repayments of 5,000. If the interest rate is 3.7% p.a. compounded monthly. Calculate the interest paid for year 10.
A loan is to be repaid over 30 years, with month-end repayments of 5,000. If the interest rate is 3.7% p.a. compounded monthly. Calculate the interest paid for year 10.
Question
A loan is to be repaid over 30 years, with month-end repayments of 5,000. If the interest rate is 3.7% p.a. compounded monthly. Calculate the interest paid for year 10. Correct your answer to the nearest cent without any units. (Do not use "$" or "," in your answer. e.g. 12345.67)
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Step 1: Given information:
VIEWStep 2: Calculate the loan remaining balance after 9 years as follows:
VIEWStep 3: Calculate the loan remaining balance after 10 years as follows:
VIEWStep 4: Calculate the reduction in principal amount as follows:
VIEWStep 5: Calculate the total monthly payments in year 10 as follows:
VIEWStep 6: Calculate the interest paid for year 10 as follows:
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