Question

To help pay for college, Elsa borrowed money from a bank. She took out a personal, amortized loan for $58,500, at an interest rate of 5.75%, with monthly payments for a term of 15 years. Find Elsa's monthly payment.

a. $477.47
b. $498.29
c. $547.21
d. $624.18

Answer 1

Elsa pays a fixed monthly amount of $477.47 towards her loan, which is being repaid in equal installments over time.

Step-by-step explanation:

To find Elsa's monthly payment, we can use the formula for calculating the monthly payment on an amortized loan:

Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Months))

Plugging in the values for Elsa's loan:

Loan Amount = $58,500

Interest Rate = 5.75% / 100 = 0.0575

Monthly Interest Rate = 0.0575 / 12 = 0.00479

Number of Months = 15 years * 12 months/year = 180 months

Using the formula:

Monthly Payment = (58500 * 0.00479) / (1 - (1 + 0.00479)^(-180)) = $3,731.06.

Therefore, Elsa's monthly payment is $3,731.06.