Question

You borrow $450 from your bank for 3 months. The loan agreement states that you must repay the loan at a rate of $150 per month plus interest. The interest rate for the loan is % above the prime interest rate. During the first month the prime rate is 45%, during the second month it is 5%, and during the third month it is 5%. What is the total amount of interest you pay on the loan?

Assume a 360 day year.

Answer 1

	A	B	C	D	E	F
	Amount ($)	Interest calculation	Interest amount	Total amount (A+C)	Amount paid (150+C)	Balance (D-E)
1st month	450	450*5.5%*30/360 = 2.062	2.062	452.062	152.062	300
2nd month	300	300*6%*30/360 = 1.49	1.5	301.5	151.5	150
3rd Month	150	150*6.5%*30/360 = 0.8125	0.8125	150.8125	150.8125	0
		Total Interest	4.3745

Hence total interest to be paid is $ 4.6745