Option C
Monthly loan payment is $ 93.33
<em><u>Solution:</u></em>
From given question,
Cost of sailboat = $ 3000
Down payment = $ 1000
<em><u>Hence net principal is given as:</u></em>
net principal = p = $ 3000 - $ 1000 = $ 2000
p = $ 2000
The bank approved a simple interest flat rate loan for 2 years at 6% APR
Hence number of years = 2 years
Rate of interest = 6 %
<em><u>Let us first calculate the simple interest</u></em>
The formula for simple interest is given as:
![\text{ simple interest } = \frac{ p \times n \times r}{100}](https://tex.z-dn.net/?f=%5Ctext%7B%20simple%20interest%20%7D%20%3D%20%5Cfrac%7B%20p%20%5Ctimes%20n%20%5Ctimes%20r%7D%7B100%7D)
Substituting the given values,
![\text{ simple interest } = \frac{ 2000 \times 2 \times 6}{100}\\\\\text{ simple interest } = 20 \times 2 \times 6 = 240](https://tex.z-dn.net/?f=%5Ctext%7B%20simple%20interest%20%7D%20%3D%20%5Cfrac%7B%202000%20%5Ctimes%202%20%5Ctimes%206%7D%7B100%7D%5C%5C%5C%5C%5Ctext%7B%20simple%20interest%20%7D%20%3D%2020%20%5Ctimes%202%20%5Ctimes%206%20%3D%20240)
Thus simple interest = $ 240
Total amount payable = principal + simple interest
Total amount payable = $ 2000 + $ 240
Total amount payable = $ 2240
<em><u>How much are the monthly loan payments?</u></em>
Here number of years = 2 years
To calculate the monthly payment divide the total amount payable by 24 (since 2 year = 24 months )
![\text{ Monthly loan payment } = \text{ Total amount payable } \div 24](https://tex.z-dn.net/?f=%5Ctext%7B%20Monthly%20loan%20payment%20%7D%20%3D%20%5Ctext%7B%20Total%20amount%20payable%20%7D%20%5Cdiv%2024)
![\text{ Monthly loan payment } = \frac{2240}{24} = 93.33](https://tex.z-dn.net/?f=%5Ctext%7B%20Monthly%20loan%20payment%20%7D%20%3D%20%5Cfrac%7B2240%7D%7B24%7D%20%3D%2093.33)
Thus monthly loan payment is $ 93.33 Option C is correct