Question

Katelyn plans to apply for a $10,000 loan at an interest rate of 5.6% for 5 years. Use the monthly payment formula to complete the statement.

P(1)(1 + 5) 121

M= (1 + 5)12² - 1

M= monthly payment

P= principal

r= interest rate

t= number of years

Rounded to the nearest cent, Katelyn's monthly payment for the loan is $

Answer 1

Answer:

Katelyn's monthly payment for the loan is $ 2,032.52

Step-by-step explanation:

The formula given is explicit,we can solve for monthly payment using the below formula

P=L(1-r/r-r^n+1)

r=1/(1+i)

i=5.6%/12=0.47%

5.6% is an annual interest rate,it would be appropriate to restate in monthly terms

r=1/(1+0.47%)=0.995

n=5 years*12 months=60

L is the loan amount of $100,000

P=100000*(1-0.995)/(0.995-0.995^60+1)

=100000*(1-0.995)/(0.995-0.74)

=100000*0.005/0.246

=$ 2,032.52