Here is the question 4 You take out an amortized loan You ta

Here is the question

4. You take out an amortized loan... You take out an amortized loan of $45,200 at a 7.5% annual interest rate, with a 7 year repayment schedule. How much will you pay in interest in Year 2? $3,004.22 $2,403.37 $2,854.01 $3,454.85

Solution

Correct option is > $3,004.22

Working:

Using financial calculator BA II Plus - Input details:

#

I/Y = Rate =

7.50

FV =

$0

N = Total terms =

                                     7

PV =

-$45,200

CPT > PMT = Monthly Payment =

$8,533.77

Year

Beginning Balance

Payment

Interest

Repayment of principal

Ending balance

Y

OP

PMT

I = OP x 7.5%

AM = PMT - I

CB

1

$45,200.00

$8,533.77

                  3,390.00

                  5,143.77

                40,056.23

2

                40,056.23

$8,533.77

                  3,004.22

                  5,529.56

                34,526.67

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate =	7.50
FV =	$0
N = Total terms =	7
PV =	-$45,200
CPT > PMT = Monthly Payment =	$8,533.77