Question

Brendon Walsh wants to borrow $50,000 from the bank. The interest rate is 6% and the term is for 5

years.


What is the monthly payment amount?


$883. 33


$10,600


$3,000


$600

Answer 1

Answer: None of the given choices match the calculated amount exactly, but the closest option is: $883.33

Step-by-step explanation:

To calculate the monthly payment amount for a loan, we can use the formula for calculating the monthly payment on a fixed-rate loan:

Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate) ^ (-Number of Months))

Given:

Loan Amount (Principal) = $50,000

Interest Rate = 6% per year

Term = 5 years

First, we need to convert the annual interest rate to a monthly interest rate. Since there are 12 months in a year, the monthly interest rate would be (6% / 12) = 0.005.

Next, we need to calculate the number of months in the loan term. Since the term is 5 years, there would be 5 * 12 = 60 months.

Now, we can substitute the values into the formula:

Monthly Payment = (50000 * 0.005) / (1 - (1 + 0.005) ^ (-60))

≈ $943.34

Therefore, the monthly payment amount for the loan would be approximately $943.34.