FinanceQuestion 69 of 100
A borrower obtains a $300,000 loan at a 6% annual interest rate. What is the interest portion of the first monthly payment?
a.$1,200
b.$2,000
c.$1,800
d.$1,500
Explanation
Annual interest is $300,000 x 0.06 = $18,000. Dividing by 12 months gives $1,500 of interest in the first month. In an amortized loan, interest is calculated on the outstanding balance, which is highest at the start.
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