Answer:
$2.77
Step-by-step explanation:
Here's one way to do it.
Data:
We must express the interest rate on a monthly basis.
i = 7.5 %/yr = 0.625 %/mo = 0.006 25
A = $1300
n = 6 mo
A. Monthly payments
The formula for the monthly payment (P) on a loan of A dollars that is paid back in equal monthly payments over n months, at an annual interest rate of i % is
[tex]P = A(\frac{i}{1-(1+i)^{-n}})[/tex]
Calculation:
[tex]P = 1300(\frac{0.006 25}{1-(1+0.006 25)^{-6}})[/tex]
[tex]P = \frac{8.125}{{1- {1.006 25}}^{-6}}[/tex]
[tex]P = \frac{8.125}{1 - 0.9633}[/tex]
[tex]P = \frac{8.125}{0.03669}[/tex]
P = $221.43
B. Total amount paid over six months
Paid = 6 × 221.43
Paid = $1328.58
C. Amount paid after four months
Paid = 4 × 221.43
Paid = $885.72
D. Balance owed after four months
Owed = 1328.58 - 885.72
Owed = 1341.14 – 1121.08
Owed = $442.86
E. Interest included in Payment 5
I = Pi
I = 442.86 × 0.006 25
I = $2.77
The interest included in Payment 5 is $2.77.
