Question

Tom’s total payment for his loan was $15,264. He paid it off after making 72 monthly payments.

What was his monthly payment?


Responses

$212


$228


$236

$242

Answer 1

Answer: We can use the formula for the total amount of a loan with fixed monthly payments:

A = P * ( (1 + r)^n - 1 ) / r

where A is the total amount, P is the monthly payment, r is the monthly interest rate, and n is the number of payments.

Since the loan amount and number of payments are known, we can solve for P:

P = A / ( (1 + r)^n - 1 ) * r

Using an estimated monthly interest rate of 0.01 (or 1%), we can calculate the monthly payment:

P = 15264 / ( (1 + 0.01)^72 - 1 ) / 0.01

P = $212.

So the monthly payment was approximately $212.

Explanation: