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How to Calculate Monthly Interest.
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How to Calculate Monthly Interest.

Rosemary Njeri

Interest is the amount of money you have to pay back over and above the principal amount borrowed. This is the way through which lenders make a profit .

Interest is usually stated as a percentage of thr principal per year.

Monthly interest is the interest paid after every 30 days or every month.

Formula to calculate monthly interest.

To calculate the monthly interest on a loan or investment, we determine the monthly interest rate by dividing the annual interest rate by 12.

Then we multiply the principal by the result.

Example:

A trader borrowed a $ 10,000 loan from a bank , the bank’s annual interest rate is 12% p.a. (per annum). Calculate the monthly interest that the trader was expected to pay.

We begin by finding the monthly rate.

Calculate Monthly Interest.

Therefore , the monthly interest rate is 1 %.

Then we multiply the principal by 1%.

Hence, the monthly interest is $ 100.

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