E maths - Compound Interest

bonkysleuth SG

A civil servant took a government loan of $90 000 to buy a car. The interest is charged at a rate of 4% p.a (per annum), calculated on a monthly basis. If he repays $900 at the end of every month, find the compound interest for the first 3 months.

Answer's $893.99. If you know how to do it, please explain to me. Thanks.

tinuviel07 SG

Interest at end of 1st month = 0.04*90000/12 = $300

Outstanding at end of 1st mth = 90000+300-900 = $89400

Interest at end of 2nd month = 0.04*89400/12 = $298

Outstanding at end of 2nd month = 89400+298-900 = $88798

Interest at end of 3rd month = 0.04*88798/12 = $295.99

Sum up all the interest you will get the ans.