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  • Solutions Please: Step 1

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    Kenneth Jao
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    The document provides a solution to calculating the monthly payment for a $30,000 loan taken over 10 years at an annual interest rate of 12%. It states the formula to use is Monthly Payment = Principal x Monthly Interest Rate / (1 - (1/(1 + Monthly Interest Rate)^Number of Payments)). Plugging the values of the loan into the formula, it calculates the required monthly payment to pay off the loan is $430.41.

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    The document provides a solution to calculating the monthly payment for a $30,000 loan taken over 10 years at an annual interest rate of 12%. It states the formula to use is Monthly Payment = Principal x Monthly Interest Rate / (1 - (1/(1 + Monthly Interest Rate)^Number of Payments)). Plugging the values of the loan into the formula, it calculates the required monthly payment to pay off the loan is $430.41.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    11 views2 pages

    Solutions Please: Step 1

    Uploaded by

    Kenneth Jao
    The document provides a solution to calculating the monthly payment for a $30,000 loan taken over 10 years at an annual interest rate of 12%. It states the formula to use is Monthly Payment = Principal x Monthly Interest Rate / (1 - (1/(1 + Monthly Interest Rate)^Number of Payments)). Plugging the values of the loan into the formula, it calculates the required monthly payment to pay off the loan is $430.41.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Question

    solutions please

    Transcribed Image Text: You borrow $30,000 for 10 years to pay tuition and fees. The annual interest rate is 12 percent. What monthly payment

    would be required to pay o the loan? ANS: Use the following formula: F= Px- 1- [1/(1+ 1) " where P = $30,000; i = 0.12 + 12= 0.01; N= 10 x 12 = 120

    Expert Solution

     Step 1

    Loan amount (P) = $30,000


    Interest rate = 12%

    Monthly interest rate (i) = 12%/12 = 1%

    Period = 10 Years

    Number of monthly payments (N) = 10*12 = 120

     Step 2

    Therefore

               Monthly payment = P*i/1-[1/(1+i) N]

                                              = 30000*0.01/1-[1/(1+0.01) 120]

                                              = 300/1-[1/1.01120]

                                              = 300/1-[1/3.30038689457367]

                                              = 300/(1-0.302994779686027)

                                              = 300/0.697005220313973

                                              = 430.41

    Hence

    Monthly payment = $430.41

    WA S TH IS H EL P FU L ?

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