Answer: £2,116.10 each month.
Explanation:
To calculate the monthly payment, we first need to find the total amount owed after the compound interest has been added. The formula for compound interest is:
A = P * (1 + r/n)^(nt)
where:
A is the amount owed,
P is the initial principal (the cost of the tractor),
r is the annual interest rate,
n is the number of times interest is compounded per year, and
t is the number of years the loan is taken out for.
In this case:
P = £64,950
r = 4% = 0.04
n = 12 (the number of months in a year)
t = 3 (the number of years the loan is taken out for)
Plugging these values into the formula, we find that:
A = £64,950 * (1 + 0.04/12)^(12*3) = £76,079.69
To find the monthly payment, we divide the total amount owed by the number of payments:
Monthly payment = A / 36 = £76,079.69 / 36 = £2,116.10
So you will pay £2,116.10 each month.