Activity Amount Balance Loan Balances, Iteratively To really understand how loans work (and how they can Correct? get you into big trouble), let's look at what happens with a loan one billing cycle at a time. New Loan $1299.00 $1 299.00 n/a First month's interest +$16.18 $1315.18 n/a Antonia is buying a new riding lawnmower which costs $1299. The store is offering a payment plan allowing her to pay it off over a year with a 14.95% APR. They tell her that her monthly payment is $117.21. First payment -$117.21 $1 197.97 n/a 2nd month's interest second payment -$117.21 Monthly Interest: Her APR is 14.95%, so we can divide that by 12 to find her monthly interest rate: 1.25%. We multiply this by her current balance to find that for first month the interest charged is .0125: 1299 = 16.18 Total Slide Score out of 4 0 So by the time Antonia's statement arrives, she owes $1315.18. When she makes her payment of $117.21, that amount is subtracted from her balance, so that she now owes 1315.18 117.21 = 1197.97. Now you try: how much interest will she be charged in the second month? And after she makes her second payment, how much will she still owe? Activity Amount Balance Loan Balances, Iteratively To really understand how loans work (and how they can Correct? get you into big trouble), let's look at what happens with a loan one billing cycle at a time. New Loan $1299.00 $1 299.00 n/a First month's interest +$16.18 $1315.18 n/a Antonia is buying a new riding lawnmower which costs $1299. The store is offering a payment plan allowing her to pay it off over a year with a 14.95% APR. They tell her that her monthly payment is $117.21. First payment -$117.21 $1 197.97 n/a 2nd month's interest second payment -$117.21 Monthly Interest: Her APR is 14.95%, so we can divide that by 12 to find her monthly interest rate: 1.25%. We multiply this by her current balance to find that for first month the interest charged is .0125: 1299 = 16.18 Total Slide Score out of 4 0 So by the time Antonia's statement arrives, she owes $1315.18. When she makes her payment of $117.21, that amount is subtracted from her balance, so that she now owes 1315.18 117.21 = 1197.97. Now you try: how much interest will she be charged in the second month? And after she makes her second payment, how much will she still owe