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28 June, 19:55

The total interest paid on a 3 -year loan at 9 % interest compounded monthly is $1505.82 determine the monthly payment for the loan.

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  1. 28 June, 23:33
    0
    Number of compounding periods is

    n=12months*3years=36

    I assume that

    The total interest=

    monthly payment*number of compounding periods - the amount of the present value of an annuity ordinary

    I=x*n-pv

    Let monthly payment be X

    I = Total interest is 1505.82

    The present value of an annuity ordinary is

    Pv=X [ (1 - (1+0.09/12) ^ (-36)) : (0.09/12) ]

    now plug those in the formula of the total interest above

    I=x*n-pv

    1505.72=36X-X [ (1 - (1+0.09/12) ^ (-36)) : (0.09/12) ]

    Solve for X using Google calculator to get the monthly payment which is

    X=330.72

    Check your answer using the interest formula

    36*330.72-330.72 * ((1 - (1+0.09

    :12) ^ (-12*3)) : (0.09:12))

    =1,505.83
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