E. 12WP 3. Juan is borrowing $41,000 for 5 years at an APR of 6.5%. What...

Question

Question

business finance

Answer 1

Answer #1

Monthly Loan Payment

Here, we’ve Loan Amount (P) = $41,000

Monthly Interest Rate (n) = 0.541667% per month [6.50% / 12 Months]

Number of months (n) = 60 Months [5 Years x 12 Months]

Therefore, the Monthly Loan Payment = [P x {r (1 + r)ⁿ} ] / [(1 + r)ⁿ – 1]

= [$41,000 x {0.00541667 x (1 + 0.00541667)⁶⁰}] / [(1 + 0.00541667)⁶⁰ – 1]

= [$41,000 x {0.00541667 x 1.3828173}] / [1.3828173 – 1]

= [$41,000 x 0.0074903] / 0.3828173

= $307.10 / 0.3828173

= $802.21 per month

“Hence, the monthly loan payment will be (D). $802.21”

Answer 2

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