Question

Susan took out a personal loan for $3.500 at an interest rate of 13% compounded monthly. Sh

loan off in 3 years. What will her monthly payment be?
a. $99.34
b. $105.32
$117.93
d. $156.60
​

Answer 1

c. $117.93

Explanation:

The amortization formula tells you this.

A = P(r/12)/(1 -(1 +r/12)^(-12t)

where A is the payment, P is the principal, r is the annual interest rate and t is the number of years. Filling in these values and doing the arithmetic gives ...

A = 3500(0.13/12)/(1 -(1 +0.13/12)^-36) ≈ 117.9288 ≈ 117.93

Susan's monthly payment will be $117.93.