Question

installment loans-monthly payment/finance charge
installment loan
principal $1,190
term length 2 years
interest rate 12%
monthly payment $56
how much of the 19th payment will go to interest if there is an outstanding principal of $325?
interest on 19th payment = $?

Explanation:

Step1: Convert annual rate to monthly

The annual interest rate is 12%, so the monthly rate $r$ is $\frac{12\%}{12}=1\%$ or $0.01$ in decimal.

Step2: Calculate interest on outstanding principal

The outstanding principal is $325$. The interest for the month (on the 19th payment) is calculated as $Outstanding\ Principal\times Monthly\ Rate$. So, $325\times0.01 = 3.25$.

Answer:

$3.25$