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Susan took out a personal loan for $3,500 at an interest rate of 13% compounded monthly. She made arrangements to pay the loan off in 3 years. What will her monthly payment be?

 Jun 12, 2014

Best Answer 

 #1
avatar+118723 
+5

This is a present value of an ordinary annuity question.

It is present value because you have a present value - the future value will be 0.

I assume the interest rate is 13% per annum.

A=3500

i=0.13/12=0.01083 repeater

1+i=1.01083 repeater

n=3*12=36

You have to find R

formula is

 $$A=R\times\frac{1-(1+i)^{-n}}{i}$$

okay, you can try the substitution by yourself.

 Jun 13, 2014
 #1
avatar+118723 
+5
Best Answer

This is a present value of an ordinary annuity question.

It is present value because you have a present value - the future value will be 0.

I assume the interest rate is 13% per annum.

A=3500

i=0.13/12=0.01083 repeater

1+i=1.01083 repeater

n=3*12=36

You have to find R

formula is

 $$A=R\times\frac{1-(1+i)^{-n}}{i}$$

okay, you can try the substitution by yourself.

Melody Jun 13, 2014

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