Interest Calculation

Let's start with a loan: Loan Example

On February 1, you borrow $1,000 to put towards a new computer.
The credit union gives you a $1,000 loan at 5.00% APR
You will make 12 monthly payments of $85.61
Your first payment will be on February 25 - 25 days after you get the loan.

1,000 divided by 12 is $83.33, so why is the payment $85.61? Let's figure it out!