Question

Item 18 A music company offers a loan to buy a drum set for $1500. The simple interest is 11.8% and the loan will be paid in equal monthly payments for 2 years. What is the monthly payment?

Answer 1

To calculate the monthly payment for a $1500 drum set with a simple interest rate of 11.8% over 2 years, total interest is first calculated and added to the principal amount. Then, the total is divided by the number of months in the loan term, resulting in a monthly payment of $77.25.

Step-by-step explanation:

To calculate the monthly payment for a $1500 drum set with a simple interest rate of 11.8% over 2 years, you need to follow these steps:

1. First, calculate the total interest over the loan period: $1500 × 0.118 × 2 years = $354.
2. Add the total interest to the principal to get the total amount to be repaid: $1500 (principal) + $354 (interest) = $1854.
3. Divide the total amount by the number of months over which the loan will be repaid: $1854 ÷ 24 months = $77.25.

Therefore, the monthly payment would be $77.25.

Answer 2

I think you have to first find out the the total payment with the interest money which is (1500x11.8%) x2 +1500= $1854. So the monthly payment for 2 years will be
$1854/24 (2years=24months) = $77.3