4 years ago

What’s the correct answer

2 answers:

8 0

B is the correct answer.....

Maslowich4 years ago

6 0

YOUR ANSWER WOULD BE B PLEASE GIVE ME THE BRAINLIEST ANSWER!

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VARVARA [1.3K]

Answer:

B. An increase in i, the interest rate, will create an increase in P, the monthly payment.

Step-by-step explanation:

We have the formula for the monthly payment as,

$P=\frac{i \times PV}{1-(1+i)^{-n} }$ ,

where P = monthly payment, i = rate of interest, PV = present value and n = time period.

Now, as i increase we get that (1+i) increases and so $(1+i)^{n}$ increases.

This gives us that, $\frac{1}{(1+i)^{n} }$ decreases and so $1-\frac{1}{(1+i)^{n}}$ decreases

Therefore, $\frac{1}{1-(1+i)^{-n} }$ increases.

So, we get that as i increases , the value of P will increase.

Hence, option B is correct.

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3 years ago