Question

Landon Wallin is an auto mechanic who wishes to start his own business. He will need $4,500 to purchase tools and equipment. Landon decides to finance the purchase with a 4 year fixed installment loan with an interest rate of 5.5%. Determine Landon's monthly payment. (Use loans formula) How much total money does he pay back the bank in 4 years? Find the interest paid.

Answer 1

Given

$4,500 to purchase tools

4 year fixed

5.5%

First, converting R percent to r a decimal

r = R/100 = 5.5%/100 = 0.055 per year.

Solving our equation:

A = 4500(1 + (0.055 × 4)) = 5490

A = $5,490.00

Answer:

A = $5,490.00

I = A - P = $990.00

A. Monthly Payment

A/(4*12) = 5490/48 = $114.375

B. Total pay

A = $5,490.00

C. Interest

I = A - P = $990.00