Question

Use the appropriate formula to find (a) the monthly (n=12) payment on a loan with the given conditions and (b) the total interest that will be paid during the term of the loan.$9,200 is amortized over 6 years at an interest rate of 6.6%(a) the monthly payment is?(b) total interest paid is?

Answer 1

We will solve as follows:

We have that the interest rate is 6.6%:

`P=((Pv\cdot R))/((1-(1+R)^(n-1))`

Here we have P the monthly payment, Pv is the Present value, R is the periodic interest rate(APR/n) n is the total number of interest periods, so:

`P=((9200)((0.066))/(12)))/((1-(1+(0.066)/(12))^(11))))\Rightarrow P\approx155.09`

So, the monthly payment is approximately $155.09.

And the total interest paid is given by:

`I=N\cdot M-P\Rightarrow I=(155.09)(72)-9200=I=1965.33`