Question

Question 10 (7 points) d Elizabeth borrowed $20,000 for five years at a 5% annual interest rate, what is her monthly payment, to the nearest dollar? A. $252 B. $334 C. $377 D. $4050 E. None of these Save

Answer 1

monthly payment is $377

C is the correct option.

Explanation:

The formula for the monthly payment is given by

`C=(Prt(1+r)^n)/((1+r)^n-1)`

Given that,

P = $20,000

n = 5 years = 60 months

r = 0.05

Substituting these values in the formula

`C=(20000\cdot (0.05)/(12)(1+(0.05)/(12))^(60))/((1+(0.05)/(12))^(60)-1)`

On simplifying, we get

`C=\$377.425\\\\C\approx \$377`

Therefore, the monthly payment is $377

C is the correct option.