Question

You borrow $600 to buy a canoe. The simple annual interest rate is 5%. You pay off the loan after 4 years of equal monthly payments. How much is each payment?

Answer 1

Amount of each payment = $15 each month

Explanation:

Given:

Amount borrow = $600

Simple rate = 5% = 0.05

Number of year = 4 year

Payment method = monthly payment

Find:

Amount of each payment

Computation:

Total amount after 4 year = P + PRT

Total amount after 4 year = 600 + (600)(4)(0.05)

Total amount after 4 year = 600 + 120

Total amount after 4 year = $720

Number of total month = 4 x 12

Number of total month = 48

Amount of each payment = Total amount after 4 year / Number of total month

Amount of each payment = $720 / 48

Amount of each payment = $15 each month