Question

The following formula is used to calculate the monthly payment on a personal loan. P = P V times StartFraction i over 1 minus (1 i) superscript negative n EndFraction In this formula, i represents the _____ of the loan. A. Annual interest rate b. Interest rate per period c. Initial amount d. Incident amount.

Answer 1

The number of periods over which interest is calculated on the loan.

We have to determine

The following formula is used to calculate the monthly payment on a personal loan.

What is the formula used to calculate monthly payments?

The formula used to calculate monthly payments are as follows;

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

Where,

1. PV is the present value or the amount of the loan.

2. i is the interest rate per period and is calculated by dividing the yearly percent rate by 100 and by the number of periods in a year.

3. n is the total number of periods and is calculated as the product of the number of periods in a year times the number of years.

Hence, the number of periods over which interest is calculated on the loan.

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