Question

Fast Corporation recently borrowed $600,000 from its bank at a simple interest rate of 14 percent. The loan is for 10 months. The loan agreement requires interest to be added to the amount borrowed and the total amount to be repaid in monthly installments. What is the loan's monthly payment?

Answer 1

$67,000

Step-by-step explanation:

For computing the loan monthly payment, first we have to determine the interest payment by using the simple interest formula which is shown below:

= Principal × rate of interest × number of months ÷ (total number of months in a year)

= $600,000 × 14% × (10 months ÷ 12 months)

= $70,000

Now the monthly payment would be

= (Interest payment + principal) ÷ number of months

= ($70,000 + $600,000) ÷ 10 months

= $670,000 ÷ 10 months

= $67,000