Question

A $10,000 loan is to be repaid at the rate of $200 per month, with an annual effective interest rate of 19.56% charged against the unpaid balance. What principal remains to be paid after the third payment

Answer 1

The appropriate response will be "9847.74".

Step-by-step explanation:

The given values are:

Effective interest rate

= 19.56%

Loan amount

= $10,000

Per month rate

= $200

Now,

⇒
`EAR = (1+(r)/(m))* m - 1`

On substituting the values, we get

⇒
`19.56 = (1+ (r)/(12) )* 12 - 1`

⇒
`(1.1956) ^ {12} = 1 + (r)/(12)`

⇒
`r = 18 \ percent`

Principal to be paid after the third payment will be:

=
`10000- 50- 50.75 - 51.51`

=
`9847.74`