Question

2. A $3000 loan on March 1 was repaid by payments of $700 on March 31, $1200 on June 15 and final payment on August 31. What was the final payment if the interest rate on the loan was 7.25%? (7 marks)

Answer 1

Final payment to be made on August 31 = $1,171 (rounded off)

Refer table below for computation:

Date	Installment amount	Interest amount	Principal amount	Balance
1-Mar	-	-	-	3,000
31-Mar	700	18	682	2,318
15-Jun	1,200	35	1,165	1,153
31-Aug	1,171	17	1,153	-

For formulas and calculations, see table below:

Date	Installment amount (A)	Interest amount (B)	Principal amount (A)-(B)	Balance
43891	0	0	0	3000
43921	700	=3000*7.25%*1/12	=700-18	=3000-682
43997	1200	=2318*7.25%*2.5/12	=1200-35	=2318-1165
44074	=1153.1+17.4	=1153.1*7.25%*2.5/12	=1170.5-17.4	=1153-1153