Final answer:
To calculate the monthly repayment required to pay off the loan in 48 equal installments, first calculate the total amount to be paid back over the 4-year period. Then, divide the total amount by the number of installments to find the monthly repayment.
Step-by-step explanation:
To calculate the monthly repayment required to pay off the loan in 48 equal installments, we first need to calculate the total amount to be paid back over the 4-year period. The equation for simple interest is:
Interest = Principal * Rate * Time
Where:
Principal = $25,000
Rate = 6% = 0.06
Time = 4 years
Using the formula, we can calculate the total interest:
Interest = $25,000 * 0.06 * 4 = $6,000
The total amount to be paid back is the sum of the principal and the interest:
Total amount = Principal + Interest = $25,000 + $6,000 = $31,000
To calculate the monthly repayment, we divide the total amount by the number of installments:
Monthly repayment = Total amount / Number of installments = $31,000 / 48 = $645.83