Biology Forums - Study Force

Billy North loaned $2,250 to his former college roommate, Jerold Weinsted. Jerold agreed to repay the principal in three monthly installments of $750 each. Billy charged interest at 0.5% (monthly rate) on the unpaid balance each month. Complete the North-Weinsted loan payment schedule. Then use the North-Weinsted loan payment schedule to solve the effective rate problem.

		Unpaid	Interest	Principal	Total	New
	Month	Balance	Payment	Payment	Payment	Balance
a.	1	______	______	$750	______	______
b.	2	______	______	$750	______	______
c.	3	______	______	$750	______	______
		---------	---------
	Total	______	______
d.	Compute the effective annual interest rate in the North-Weinsted loan agreement by using
	where P is the average principal over the 3-month period, I is the total amount of interest, and T is 3/12 year.

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