Question

To help open up a wine bar, Jose borrowed money from a bank. He took out a personal, amortized loan for $49,000, at an interest rate of 6. 65%, with monthly payments for a term of 7 years

Answer 1

Using simple interest, it is found that the monthly payments are of $854.875.

Simple Interest

Simple interest is used when there is a single compounding per time period.

The amount of money after t years in is modeled by:

$A(t) = A(0)(1 + rt)$

In which:

• A(0) is the initial amount.

• r is the interest rate, as a decimal.

In this problem, the parameters are A(0) = 49000, r = 0.0665, t = 7, hence the total amount is of:

$A(t) = A(0)(1 + rt)$

$A(t) = 49000[1 + 0.0665(7)]$

$A(t) = 71809.5$

Payments over a period of 12 x 7 = 84 months, hence the monthly payments are of:

71809.5/84 = $854.875.

More can be learned about simple interest at brainly.com/question/25296782