Question

Richard borrowed $1,250 for two years at 14% a year under an add-on plan. He repaid the loan, including interest, in 24 equal payments. How much was each payment?

Answer 1

$1,250 compounded 14% in two years $1,624.50/24 = $67.6875 monthly payment.

Answer 2

First you need to use the compound interest formula to work out the amount of money he had after those two years. To do this you have to make a multiplier for the 14% and you have to put the number of years to the power of the multiplier and of course you need to times the original amount by the multiplier:
(100+14)/100 = 1.14 (making the multiplier)

1250*(1.14)^2 = 1624.5

Then you divide the 1624.5 by 24 to get the equal payments:
1624.5/24 = $67.6875 (rounded to $67.69)

Richard made payments of $67.69 24 times to pay off the loan he had taken out.

Hope this helps! :)