Question

Jim borrowed $12,500 at 6% per annum compound interest . At the end of the first year ,he repaid $5,500.

calculate the interest on the loan for the first year

Answer 1

The amount of repayment AT THE END of the first year does not reduce the interest on the loan for the first year.

The interest of 6% per annum compounded monthly

= 12500*[(1+(0.06/12))^12-1]

= 770.97 (to the nearest cent)