Consider a loan of Php 40,000, payable for 24 months at an interest rate of 8% compounded monthly. The periodic payment is computed at P1,809.09. What is the interest for the first period? O Php266.67 O Php226.14 O Php133.33 O Php150.76

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.