Question

A loan's quirky terms require the first payment to be made at the moment the money is lent. Payments are $60 every month, the monthly interest rate is 0.31%, and the loan is paid off in equal payments over 6 years.
How much money was borrowed?
Answer and round to the nearest cent.

Answer 1

Answer:

borrow amount  = $3866.50

Explanation:

given data

Payments = $60 every month

interest rate  = 0.31% monthly = 0.0031

time = 6 year = 6 × 12 = 72 months

solution

we get here money borrowed

so amount of loan is express as

borrow amount  = Payments  × $\frac{1-(1+r)^{-t}}{r}$   ...................1

here r is rate and t is time

put here value and we get

borrow amount  =  $60  × $\frac{1-(1+0.0031)^{-72}}{0.0031}$  

borrow amount  = $3866.50