Question

What monthly payment is needed to pay off a loan of $10,000 amortized at 12% compounded monthly for 12 months

Answer 1

Given:

Principal(p) = $10 000

rate(r) = 12% = 0.12

Time(t) =12 months = 1 (year)

n= 12

Using the formula below:

`A=P(1+(r)/(n))^(nt)`

Substitute the values and evaluate:

`A=10000(1+(0.12)/(12))^(12*1)`

`=10000(1+0.01)^(12)`
`=10000(1.01)^(12)`

`=10000*1.126825`

`=11268.25`

Amount to be paid is $11,268.25

Monthly payment = $11,268.25 /12 = $939.02

Therefore, monthly payment needed to pay off the loan is $939.02