Question

Determine the monthly payment of a loan for $3,000 at 7. 5% interest compounded monthly for 36 months. A. $93. 32 b. $95. 40 c. $211. 33 d. $253. 60.

Answer 1

The correct statement is that the monthly payment of a loan of $3000 will be $104.11. The calculations obtained are not relevant with the options of the statement quoted above.

The calculations can be done by applying the values to the formula of compounded interest and then further multiplying the values obtained with the number of monthly payments.

Calculation of Compounded Monthly Payments

• The formula to calculate compound interest is as below.

• $\rm Compounded\ Annuity= 3000(1+ \dfrac{0.075}{12})^1^2\ ^x\ ^3\\\\\\\rm Compounded\ Annuity= 3000(1+ 0.00625)^3^6\\\\\\\rm Compounded\ Annuity= 3754.11$

• The values obtained will now be derived into the following formula,

• $\rm Compounded\ Payments = \dfrac{Annuity}{No.\ of\ Monthly\ Payments}\\\\\\\rm Compounded\ Payments = \dfrac{3754.11}{36}$

• Continuing further,

• $\rm Compounded\ Payments= \ 104.11$

So, it is clear that the compounded monthly payments will be $104.11.

Hence, the monthly payment of loan for 36 months will be $104.11 which will be paid monthly at the rate of 7.5%.

To know more about Compounded payments, click the link below.

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