Question

Someone please help me on this I’m stuck

A store offers a loan for $900 to buy a computer. The terms of the loan
are for 9% simple interest and equal monthly payments for three years.
What is the monthly payment?

O $1143
O $700
o $31.75
o $92.50

Answer 1

(c) $31.75

Explanation:

First of all, you need to use some number sense to estimate an answer.

If the $900 loan had no interest, 1/3 of it would be paid off in each of the 3 years, or about $300 each year. You will be making 12 monthly payments each year, so the amount of principal being paid with each payment is $300/12 = $25. Any answer much above this amount will not make sense, so you can immediately reject all choices except $31.75.

__

The simple interest on the loan is ...

I = Prt = $900×0.09×3 = $243

That, too, is divided among the 36 payments, so adds ...

$243/36 = $6.75 to each of the $25 payments we calculated above.

The monthly payment is ...

$25 +6.75 = $31.75