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The tractor will cost £64,950 the compound interest rate is 4% per annum. You will pay back the loan in 36 equal monthly payments. What will you pay each month?

User Kent Robin
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1 Answer

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Answer: You will pay £1,912.54 each month.

Explanation:

We can use the formula for the monthly payment of a loan with compound interest:

monthly payment = (principal * monthly interest rate) / (1 - (1 + monthly interest rate)^(-n))

where principal is the amount borrowed, monthly interest rate is the annual interest rate divided by 12, and n is the total number of monthly payments.

In this case, the principal is £64,950, the annual interest rate is 4%, so the monthly interest rate is 4%/12 = 0.00333, and the number of monthly payments is 36.

Plugging in these values, we get:

monthly payment = (64950 * 0.00333) / (1 - (1 + 0.00333)^(-36)) = £1,912.54

Therefore, you will pay £1,912.54 each month.

User Nellie
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