What is the interest payment on a $96,000 loan at 5% interest for the first month?

What is the interest payment on a $96,000 loan at 5% interest for the first month?

• A. $400.00
• B. $365.21
• C. $410.00
• D. $394.52

Answer: (B)

To calculate the interest payment on a $96,000 loan at an interest rate of 5% for the first month, it's important to understand how interest accrues. The formula for calculating monthly interest is: Interest = Principal × Rate × Time In this case, the principal is $96,000, the annual interest rate is 5%, and the time period is one month, which we express as a fraction of the year (1/12). 1. First, convert the annual interest rate from a percentage to a decimal: 5% = 0.05. 2. Next, calculate the monthly interest amount using the formula: Interest = $96,000 × 0.05 × (1/12) Calculating this yields: Interest = $96,000 × 0.05 / 12 Interest = $96,000 × 0.00416667 Interest = $400.00 This amount of $400.00 represents the interest payment for the first month, and thus is the correct answer to the question. The other choices likely stem from incorrect calculations or understanding of how the monthly interest is derived.

To calculate the interest payment on a $96,000 loan at an interest rate of 5% for the first month, it's important to understand how interest accrues. The formula for calculating monthly interest is:

Interest = Principal × Rate × Time

In this case, the principal is $96,000, the annual interest rate is 5%, and the time period is one month, which we express as a fraction of the year (1/12).

1. First, convert the annual interest rate from a percentage to a decimal: 5% = 0.05.

2. Next, calculate the monthly interest amount using the formula:

Interest = $96,000 × 0.05 × (1/12)

Calculating this yields:

Interest = $96,000 × 0.05 / 12

Interest = $96,000 × 0.00416667

Interest = $400.00

This amount of $400.00 represents the interest payment for the first month, and thus is the correct answer to the question. The other choices likely stem from incorrect calculations or understanding of how the monthly interest is derived.