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1 answer:
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Answer:
a. $188.49; b. $7916.44; c. 816.44
Step-by-step explanation:
Part a. <em>Monthly payment </em>
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
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 = $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. <em>Total interest </em>
Total interest = total payments – principal
Total interest = 7916.44 – 7100.00
Total interest = $816.44