Asked by Jayla Barwari on Apr 24, 2024
Brendina Gillespie wanted to buy a new car. A bank would loan the sum of $18,000 if Brendina would repay the loan over two years. Compute the size of the monthly payment that Brendina needs to pay in order to amortize the loan with interest of 12% compounded monthly on the unpaid balance. Use Tables 23-2A and 23-2B or a calculator.
Amortize
The process of gradually paying off a debt over a period through scheduled payments, which may include interest.
Compounded Monthly
Interest on an investment or loan calculated and added to the principal balance on a monthly basis, allowing it to grow at an accelerated rate.
Monthly Payment
Monthly payment is the amount of money paid each month on a loan, mortgage, or other debt.
- Review the effects of making financial decisions on loans that feature amortization, monthly payment schedules, and compounding interest rates.
- Apply financial formulas and tables to real-life financial planning and decision-making.
Learning Objectives
- Review the effects of making financial decisions on loans that feature amortization, monthly payment schedules, and compounding interest rates.
- Apply financial formulas and tables to real-life financial planning and decision-making.