A buyer obtains a loan for $200,000 at 6% annual interest. What is the monthly interest payment for the first month?
Correct Answer
B) $1,000
Annual interest = $200,000 x 6% = $12,000. Monthly interest = $12,000 / 12 = $1,000.
Why This Is the Correct Answer
Related Concepts
Annual interest is the total amount of interest charged on a loan or investment over a year.
Monthly interest is the portion of the total annual interest that is paid or accrued each month.
Converting a percentage to a decimal involves dividing the percentage value by 100.
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