Question

Liam had an extension built onto his home. He financed it for 48 months with a loan at ​% APR. His monthly payments were . How much was the loan amount for this​ extension?

Answer 1

The loan is $31,694.73

Step-by-step explanation:

The complete question is as follows;

Liam had an extension built onto his home. He financed it for 48 months with a loan at 5.75.7​% APR. His monthly payments were $740. How much was the loan amount for this​ extension?

solution

We proceed as follows;

From the question, we have the following terms:

Rate = 5.7%

The monthly rate is thus;

Monthly rate = 5.7% / 12 = 0.475%

Mathematically;

Loan = Annuity * [1 - 1 / (1 + r)^n] / r

Loan = 740 * [1 - 1 / (1 + 0.00475)^48] / 0.00475

Loan = 740 * [1 - 0.796554] / 0.00475

Loan = 740 * 42.830712

Loan = $31,694.73