Question

Suppose you borrow $1,200 at an add-on interest rate of 5% for 4 years. What will be the amount of your monthly payment ?

Answer 1

1200* (5% * 4) = 240
240 + 1200 = 1440
1440/12 = $120

The answer is $120 per month.

Answer 2

The amount can be calculated using the formula

`A=P( 1+(r)/(100))^t`

Here P is the Principal ,r is the rate of interest and t is the formula .

In the given question P=$1200 ,r=5% ,t= 4 years.

Substituting these values in the formula

`A=1200( 1+(5)/(100) )^4`

`A=1200(1.05)^(4)`

A=1458.60

Amount of monthly payment=
`(1458.60)/(12) =121.55`

The amount of your monthly payment is $121.55.