Loan Interest Calculation Methods

The video tutorial explains how to calculate interest on a loan using the add-on method. It covers the simple interest formula, calculating the total loan amount, determining monthly payments, and breaking down payments into interest and principal. Finally, it demonstrates how to calculate the monthly and annual interest rates for the last month of the loan.

What method is used to determine the interest on the loan in this problem?

• Flat Rate Method

• Add-On Method

• Compound Interest Method

• Reducing Balance Method

What is the principal amount of the loan discussed in the video?

• $1,500

• $1,360

• $1,000

• $1,200

What is the annual interest rate applied to the loan?

• 6%

• 8%

• 7%

• 5%

How many years is the term of the loan?

• 1 year

• 2 years

• 3 years

• 4 years

What formula is used to calculate the interest in this problem?

• Simple Interest Formula

• Compound Interest Formula

• Discounted Cash Flow Formula

• Amortization Formula

What is the total interest calculated for the loan?

• $300.00

• $250.00

• $200.00

• $285.60

What is the total amount due after adding interest to the principal?

• $1,700.00

• $1,800.00

• $1,645.60

• $1,500.00

How many months are used to calculate the monthly payment?

• 30 months

• 24 months

• 48 months

• 36 months

What is the approximate monthly payment amount?

• $50.00

• $40.00

• $55.00

• $45.71

What is the principal component of the monthly payment?

• $30.00

• $40.00

• $35.78

• $37.78