Question

What is the total interest for a $1,500 1-year simple interest amortized loan at 6% interest, with monthly payments

Answer 1

Monthly payment	=	[P × R × (1+R)^N ] / [(1+R)^N -1]
Using the formula:
Loan amount	P	$                                                              1,500
Rate of interest per period:
Annual rate of interest		6.000%
Frequency of payment	=	Once in 1 month period
Numer of payments in a year	=	12/1 =	12
Rate of interest per period	R	0.06 /12 =	0.5000%
Total number of payments:
Frequency of payment	=	Once in 1 month period
Number of years of loan repayment	=	1.00
Total number of payments	N	1 × 12 =	12
Period payment using the formula	=	[ 1500 × 0.005 × (1+0.005)^12] / [(1+0.005 ^12 -1]
Monthly payment	=	$                                                            129.10
Loan payment		$                                                            129.10
Real estate taxes		$                                                            515.00
Insurance		$                                                              41.67
Total monthly payment		$                                                            685.77
Total interest pay:
Total payments	=	129.1 × 12
		$                                                         1,549.20
Less principle amount		$                                                         1,500.00
Interest payment- Finance charge		$                                                              49.20

Answer is $49.20

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