Question

Solve the problem using the formula below:

Interest= 2yc / m(n+1)

Given a note for $1,000, with 24 equal monthly payments, and a 7.5% true annual interest rate is charged. What is the principal plus interest payment?

Answer 1

The interest payment
Interest= 2yc / m(n+1)
0.075=(2×12×c)/(1000 (24+1))
Solve for c
0.075=(24×c)/(1000×25)
0.075=24c/25000
Cross multiplication
0.075×25000=24c
1875=24c
Divide each side by 24
C=1,875÷24
C=78.125 per month

The amount of principle payment is
P=1,000÷24
P=41.67 per month


The principal plus interest payment is
78.13+41.67=119.8 per month

Answer 2

The principal plus interest payment c is $125

Explanation:

Amount Financed (m) = $1000

Number of payments(n) = 24

Since there is 24 equal monthly payments.

So, he is paying equal payments for 24 months (2 years)

Number of payment per year(y) = 12

Annual interest rate (I)=12% =0.12

Thus to calculate the principal plus interest payment i.e. c

Since The formula :

`I=(2yc)/(m(n+1))`

`0.12=(2*12*c)/(1000(24+1))`

`0.12=(24*c)/(25000)`

`0.12*25000=24*c`

`3000=24*c`

`(3000)/(24)=c`

`125=c`

Hence the principal plus interest payment c is $125