Question

The bank agrees to give you a loan of

$1,500,000 with 3% simple interest over 15
years. How much will your monthly payments
be?
How do I solve the steps ?

Answer 1

Answer: Monthly Payment = $12,083.34

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Step-by-step explanation:

i = P*r*t ... simple interest formula

i = (1,500,000)*(0.03)*(15)

i = 675,000

The amount of interest you need to pay is $675,000

The total amount to pay back is 1,500,000+675,000 = 2,175,000 dollars.

Divide this over 180 months (since 15 years = 15*12 = 180 months) to get

(2,175,000)/180 = 12,083.3333333333

This rounds up to the nearest cent to get 12,083.34

I rounded up to make sure to clear the hurdle. Note how

180*(12,083.33) = 2,174,999.4

which is a bit short of the 2,175,000 mark we're after