Find the amount of interest and the monthly payment for the loan. Purchase a living room set for $3,400 at 12% add-on interest for 5 years. (Round your monthly payment to the nearest cent.)
your answer is 1800 is amount of interest paid and at 80 dollars a month
To find the amount of interest and the monthly payment for the loan, we need to follow these steps:
Step 1: Calculate the interest amount.
The add-on interest formula is: Interest = Principal * Interest Rate
In this case, the principal (amount borrowed) is $3,400, and the interest rate is 12%.
Interest = $3,400 * 0.12
Interest = $408
So, the amount of interest for the loan is $408.
Step 2: Calculate the total amount repaid.
Total Amount Repaid = Principal + Interest
Total Amount Repaid = $3,400 + $408
Total Amount Repaid = $3,808
Step 3: Calculate the monthly payment.
To find the monthly payment for the loan, we divide the total amount repaid by the number of months. In this case, the loan term is 5 years, which is equivalent to 60 months.
Monthly Payment = Total Amount Repaid / Number of Months
Monthly Payment = $3,808 / 60
Monthly Payment ≈ $63.47
So, the monthly payment for the loan is approximately $63.47.