Question

Calculate the monthly interest amount based on the following facts: loan amount $36,000, annual interest rate of 5%. A) $1,500 B) $1,800 C) $150 D) $180

Answer 1

To calculate the monthly interest amount, we need to follow these steps:

1. Convert the annual interest rate to a monthly rate. Since there are 12 months in a year, divide the annual interest rate by 12. In this case, 5% divided by 12 equals 0.4167% (approximately).

2. Calculate the monthly interest amount by multiplying the loan amount by the monthly interest rate. The loan amount is $36,000, and the monthly interest rate is 0.4167%. So, $36,000 multiplied by 0.4167% equals $150 (approximately).

Therefore, the correct answer is C) $150.

By using this calculation, we find that the monthly interest amount for the given loan amount and interest rate is $150.