Question

Compute the monthly payments for an add-on interest loan of $840, with an annual interest rate of 9% and a term of 3 years.

Answer 1

To determine the monthly payment for add -on -interest:

`\begin{gathered} \text{ principal= \$840} \\ \text{ annual interest rate = 9\%} \\ \text{time = 3 years} \end{gathered}`
`\begin{gathered} \text{Interest = }\frac{P\text{ X R X T}}{100} \\ \text{Interest = }\frac{\text{ \$ 840 x 9 x 3}}{100} \\ \text{Interest = \$226.8} \end{gathered}`

Payment Amount = $840 + $226.8 = $1066.8

Term of 3 years = 3 x 12 = 36months

`\begin{gathered} \text{Add on Interest = }\frac{\text{ \$ 1066.8}}{36} \\ \text{Add on interest = \$29.6333} \\ \text{Add on interest = \$29.63} \end{gathered}`

Therefore the monthly payment for add on interest loan = $29.63