Question

If a family borrows $23,574 for an addition to their home, and the loan is to be paid off in monthly payments over a period of 10 years, how much should each payment be? (Interest has been included in the total amount borrowed.)

Answer 1

We have been given the following information:

Total amount borrowed (Including interest) =$23,574

Number of years = 10 years

Step 1: Find the amount paid per year

$\text{Amount paid per year=}\frac{\text{ \ 23,574}}{10}=\text{ \ 2357.4}$

Step 2: Find the amount paid per month.

Since there are 12 months in a year

$\text{Amount paid per month=}\frac{\text{ \ 2357.4}}{12}=\text{ \ 196.45}$