Question

interest rate of 2.99% compounded monthly for a 4 year loan, find the regular monthly payments required to repay the loan.

Answer 1

Using it's formula, considering a loan of $10,000, the regular monthly payments required to pay off the loan will be of $221.3.

What is the monthly payment formula?

It is given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

In which:

• P is the initial amount.

• r is the interest rate.

• n is the number of payments.

In this problem, we have that the parameters are given as follows:

P = 10,000, r = 0.0299, n = 4 x 12 = 48.

Then:

r/12 = 0.0299/12 = 0.00249167.

Hence, the monthly payment will be given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

$A = 10000\frac{0.00249167(1+0.00249167)^{48}}{(1+0.00249167)^{48} - 1}$

A = 221.3.

More can be learned about the monthly payment formula at https://brainly.com/question/22846480

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