A $15,000 personal loan carries a 5.5% interest rate, compounded semi-annually, and is to be repaid quarterly over a 4-year period. Determine the amount of interest paid in the second year.

Question

Quizplus · Accepted Answer

To find the interest paid in the second year, calculate the loan balance at the end of the first year and the end of the second year using the amortization formula. The interest rate per period is 2.75% (5.5%/2), and the loan is repaid in 16 quarterly payments. Calculate the interest for each quarter in the second year and sum them up to get $557.13.

A $15,000 Personal Loan Carries a 5