Question

Investigate the effect of the term on simple interest amortized auto loans by finding the monthly payment and the total interest for a loan of $13,000 at 97% interest if the term is the 8 following. (Round your answers to the nearest cent.)

(a) three years
payment$
total interest
(b) four years
payment $
total interest
(c) five years
payment $
total Interest $

Answer 1

To calculate the monthly payment for a simple interest amortized auto loan, use the formula Monthly Payment = Principal + Total Interest / Term.

Step-by-step explanation:

To calculate the monthly payment for a simple interest amortized auto loan, we can use the following formula:

Monthly Payment = Principal + Total Interest / Term

For a loan of $13,000 at 97% interest:

• (a) Three years: Monthly Payment = $13,000 + ($13,000 * 0.97 * 3) / 36
• (b) Four years: Monthly Payment = $13,000 + ($13,000 * 0.97 * 4) / 48
• (c) Five years: Monthly Payment = $13,000 + ($13,000 * 0.97 * 5) / 60

Using these formulas, calculate the monthly payment and total interest for each term option, rounding the answers to the nearest cent.