Question

Jeanne has $14800, 3 and half loan with a high APR of 8.57 due to her less-than-average credit rating. What is the monthly payment for this loan?

Answer 1

Jeanne has $14800, 3 and half year loan with a high APR of 8.57 due to her less-than-average credit rating. What is the monthly payment for this loan?

Answer:

$409.57

Explanation:

The formula for loan payment is given by:

`p= (r(pv))/(1-(1+r)^(-n) )`

pv = present value

r = rate per period

n = number of periods

Loan period is 3 and half years

for monthly payments, number of periods is (3 and half years) x 12 months

= 3.5 x 12 months = 42 months

Annual Payment Rate = 8.57 percent = 8.57/100 =0.0857

Rate per month = Annual Payment Rate /12 months

= 0.0857/ 12 = 0.00714

P =
`(0.00714(14800))/(1-(1+0.00714)^(-42) )`

`(105.67)/(1-(1.00714)^(-42) )`

`(105.67)/(1-0.742) }`

=
`(105.67)/(0.258 )`= $409.57