Final answer:
To calculate the monthly payments for a loan of $210,000 with 2% simple interest over 10 years, you first find the total interest ($42,000), add it to the principal to get the total repayment ($252,000), and then divide by 120 months to get a monthly payment of $2,100.
Step-by-step explanation:
To calculate the monthly payments for a $210,000 loan at 2% simple interest over 10 years, you need to first calculate the total interest, add it to the principal, and then divide by the number of months in 10 years.
Calculating Total Interest
Total interest (I) on a loan using simple interest is calculated using the formula I = P * r * t, where:
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- P is the principal amount ($210,000)
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- r is the annual interest rate (2%, or 0.02)
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- t is the time in years (10)
So, I = $210,000 * 0.02 * 10 = $42,000.
Calculating Total Loan Repayment
Total repayment (R) is the sum of the principal and the total interest, which is $210,000 + $42,000 = $252,000.
Calculating Monthly Payment
The number of months over 10 years is 10 * 12 = 120 months. Therefore, monthly payment (M) is R divided by the total number of months:
M = $252,000 / 120 months = $2,100 per month.
Hence, your monthly payment will be $2,100.