Question

Jerry goes to the bank and borrows $9,000 for farm equipment. The simple yearly interest is 9.5% and he pays off the loan over a period of 2 years with 24 equal monthly payments. What’s Jerry’s monthly payment

Answer 1

Jerry's monthly payment can be calculated using the formula for the monthly payment on a loan. Plugging in the given values will give the exact monthly payment amount.

Step-by-step explanation:

To calculate Jerry's monthly payment, we can use the formula for the monthly payment on a loan:

Monthly Payment = P × r × (1 + r)^(n) / ((1 + r)^(n) - 1)

Where:

• P is the principal amount borrowed, which is $9,000
• r is the monthly interest rate, which is calculated by dividing the annual interest rate by 12 and converting it to a decimal. In this case, it would be 9.5% / 12 = 0.0079 (rounded to four decimal places)
• n is the total number of payments, which is 2 years × 12 months = 24 months

Plugging in the values:

Monthly Payment = $9,000 × 0.0079 × (1 + 0.0079)^(24) / ((1 + 0.0079)^(24) - 1)

Simplifying this equation will give us the monthly payment amount.

Answer 2

To solve this problem you must appply the formula for simple interest, which is:

I = RxPxN

I: Simple Interest.
R:Rate (9.5$/100=0.095/12).
P: The principal (P=$9000).
N:number of periods (N=24).

When you substitute these values into the formula, you obtain:

I=RxPxN
I=(0.095/12)x9000x24
I=$1710

Therefore, the monthly payment is:

$1710/24=$71.25

What is Jerry's monthly payment?

The answer is: Jerry's monthly payment is $71.25