Question

Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. Assume that you take out a $6000 loan for 33 months at 8.5% APR. How much total interest will you have paid at the end of the 33 months? (Round your answer to the nearest cent.)

Answer 1

Monthly payment=Loan*(rate/12)/(1-1/(1+rate/12)^(12*t))=6000*(8.5%/12)/(1-1/(1+8.5%/12)^33)

Total payment=6000*(8.5%/12)/(1-1/(1+8.5%/12)^33)*33

Interest=6000*(8.5%/12)/(1-1/(1+8.5%/12)^33)*33-6000=749.673646