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13 July, 19:48

Katelyn plans to apply for a $10,000 loan at an interest rate of 5.6% for 5 years. Use the monthly payment formula to complete the statement.

P (1) (1 + 5) 121

M = (1 + 5) 12² - 1

M = monthly payment

P = principal

r = interest rate

t = number of years

Rounded to the nearest cent, Katelyn's monthly payment for the loan is $

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Answers (1)
  1. 13 July, 20:38
    0
    Katelyn's monthly payment for the loan is $ 2,032.52

    Step-by-step explanation:

    The formula given is explicit, we can solve for monthly payment using the below formula

    P=L (1-r/r-r^n+1)

    r=1 / (1+i)

    i=5.6%/12=0.47%

    5.6% is an annual interest rate, it would be appropriate to restate in monthly terms

    r=1 / (1+0.47%) = 0.995

    n=5 years*12 months=60

    L is the loan amount of $100,000

    P=100000 * (1-0.995) / (0.995-0.995^60+1)

    =100000 * (1-0.995) / (0.995-0.74)

    =100000*0.005/0.246

    =$ 2,032.52
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