Question

Determine the monthly payment of a loan for $3,000 at 7.5% interest compounded monthly for 36 months.

a.
$93.32
b.
$95.40
c.
$211.33
d.
$253.60

Answer 1

$93.32

Explanation:

Answer 2

The monthly payment is $93.32 ⇒ answer a

Explanation:

* Lets explain how to solve the problem

- The monthly payment is
`(P(r))/(1-(1+r)^(-n) )`

where:

# P is the loan amount

# r is the rate per period in decimal

# n is the number of periods

- The loan is $3000

- We need to find the monthly payment

∴ P = $3000

- The compound monthly interest is 7.5% for 36 months

∵ The period is 12 (1 year = 12 months)

- Divide the rate as a decimal by 12

∴
`r=(7.5)/(100(12))=0.00625`

∴ r = 0.00625

∴ n = 36

* Lets calculate the monthly payment using the rule above

∵ Monthly payment =
`((3000)(0.00625))/(1-(1+0.00625)^(-36))=93.32`

∴ The monthly payment is $93.32