Good morning! Can someone please help with this problem about Monthly Interest rates.
1 answer:
Answer:
- A) 0.5%
- B) 1346.69
- C) see attached
Step-by-step explanation:
A) The monthly rate used in these calculations is 1/12 of the annual rate, so is ...
... i = 6%/12 = 0.5% = 0.005
B) The formula is embedded in the spreadsheet just as written on your problem page. The spreadsheet calculates the payment amount for P=4000 and n=3 to be $1346.69.
C) Several additional calculations need to be made to fill in the table. The Principal is the starting value for Month 1, but for each succeeding month, it is the previous Balance.
The Interest is the product of the Principal and the monthly Rate. The new Balance is the result of subtracting the Payment amount from the sum Principal plus Interest.
Of course, the final Balance should be zero if all of the calculations are correct.
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