Shelly Sanders gets a loan for $3,000 and repays the loan in 12 monthly payments of $258 per month. Under the APR formula, what is the amount of interest included in her first payment?

Answer: $8

Explanation:

Total loan is $3,000

Monthly instalments of $258

Tenor of 12 months

Total interest paid on loan = $258 x 12 = $3,096

Interest = $3,096 - $3,000 = $96

Apr = $96/$3000 = 0.032

= 0.032 x 100

= 3.2% annual rate

= 3000 x 3.2%

= 96/12 = $8