Question

faith is taking out an 7,100, 3.5 year loan with a apr of 6.2% what is the monthly payment for this laon ? b what is the total amont faith will pay in monthly payment?nwhat is the finance charge ?

Answer 1

Answer:

a. $188.49; b. $7916.44; c. 816.44

Step-by-step explanation:

Part a. Monthly payment

The formula for the monthly payment (P) on a loan of A dollars that is paid back in equal monthly payments over n months at an annual interest rate

of i % is

$P = A(\frac{i}{1-(1+i)^{-n}})$

We must express the interest rate on a monthly basis.

i = 6.2 %/yr = 0.5167 %/mo = 0.005 167

A = $7100

n = 42 mo

$P = 7100(\frac{0.005 167 }{1-(1+0.005 167)^{-42}})$

$P = \frac{36.68}{1-1.005 167^{-42}}$

$P = \frac{36.68}{1-0.8053}$

$P = \frac{36.68}{0.1946}$

P = $188.49

Faith’s monthly payment is $188.49.

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b. Total payment

Faith makes 42 payments of $188.49.

Total payments = 42 × 188.49

Total payments = $7916.44

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c. Total interest

Total interest = total payments – principal

Total interest = 7916.44 – 7100.00

Total interest = $816.44