Question

Reset Janet’s loan back to $3500, 24% interest, but pretend she decided from the start that her pay-off goal was 4 years instead of 2. What is Janet’s new monthly payment?

Answer 1

Using simple interest, it is fond that Janet’s new monthly payment is of $142.92.

Simple Interest

Simple interest works like a simple linear function, in which the amount increases proportionally with the interest rate.

The amount of money after t years in simple interest is modeled by:

$A(t) = A(0)(1 + rt)$

In which:

• A(0) is the initial amount.

• r is the interest rate, as a decimal.

In this problem:

• The amount is of $3500, hence A(0) = 3500.

• The rate is of r = 0.24.

• She pays in 4 years, hence t = 4.

The total amount paid is of:

$A(t) = A(0)(1 + rt)$

$A(4) = 3500[1 + (0.24)(4)]$

$A(4) = 6860$

She pays in 4 x 12 = 48 months, hence the monthly payment is of:

$6860/48 = $142.92.

You can learn more about simple interest at https://brainly.com/question/25296782