Question

Adam borrowed $1,200 for 18 months at 11.5% simple interest underan add-on plan. What was his monthly payment?a. $1,312.50b. $138c. $78.17d. $150

Answer 1

`\text{ \$78.17}`

Step-by-step explanation:

Before we get his monthly payments, we need to get the total amount he is to pay back

Mathematically, that is the sum of the amount borrowed (principal) and the interest

We can get the interest by using the simple interest formula

We have that as:

`I\text{ = }(PRT)/(100)`

where P is the amount borrowed(principal) which is $1,200

R is the interest rate which is 11.5%

T is the time, which is 18 months (we divide this by 12)

We have this as:

`I\text{ = }(1200*11.5*1.5)/(100)\text{ = 207}`

The total amount he is to pay back is:

`\text{ \$207 + \$1,200 = \$1,407}`

Now, to get the monthly payment, we divide this value by the number of months (18) as follows:

`(1407)/(18)\text{ = \$78.17}`