Jack O. Lantern is interested in knowing what his son owes on his mortgage loan. If Jack knows that the interest portion of their last monthly payment was $391.42, and their interest rate is 11.5%, then what was the outstanding balance of their loan before that last payment was made?

The outstanding balance on the loan is $3,403.65

Explanation:

Latest interest paid = $391.42; this is 11.5% of the interest rate

The outstanding balance is calculated as follows:

11.5% = $391.42

100% = ?

Let the outstanding loan before the 11.5% interest pay be represented by unknown value y

Therefore, cross multiply the above equations to get the following:

100*391.42 = 11.5*y

39,142/11.5=11.5y/11

3,403.65 = y