Question

- - O CONSUMER MATHEMATICS Finding the monthly payment, total payment, and intere... To help open up a restaurant, Mal borrowed money from a bank. She took out a personal, amortized loan for $43,500, at an interest rate of 6.85%, with monthly payments for a term of 7 years. For each part, do not round any intermediate computations and round your final answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) Find Mai's monthly payment. x 5 ? (b) If Mal pays the monthly payment each month for the full term, find her total amount to repay the loan. (c) If Mal pays the monthly payment each month for the full term, find the total amount of Interest she will pay.

Answer 1

Answer a.

Annual interest rate = 6.85%
Monthly interest rate = 0.57083%

Amount borrowed = $43,500
Period = 7 years or 84 months

Let monthly payment be $x

$43,500 = $x/1.0057083 + $x/1.0057083^2 + … + $x/1.0057083^83 + $x/1.0057083^84
$43,500 = $x * (1 - (1/1.0057083)^84) / 0.0057083
$43,500 = $x * 66.580378
$x = $653.35

Monthly payment = $653.35

Answer b.

Total amount paid = 84 * $653.35
Total amount paid = $54,881.40

Answer c.

Total interest paid = Total amount paid - Amount borrowed
Total interest paid = $54,881.40 - $43,500
Total interest paid = $11,381.40