Brenda took out a personal loan for $12,500 at an interest rate of 12% compounded
monthly. She made arrangements to pay the loan off in 5 years. What will her monthly
payment be?

The monthly payment is $ 1892.392

Solution:

The formula for compound interest, including principal sum, is:

Where,

A = the future value of the investment

P = the principal investment amount

r = the annual interest rate (decimal)

n = the number of times that interest is compounded per unit t

t = the time the money is invested or borrowed for

From given,

p = 12500

t = 5 years

n = 12 ( compounded mothly )

Substituting the values we get,

What will her monthly  payment be?

Thus monthly payment is $ 1892.392

Her monthly  payment will be $171.045

Step-by-step explanation:

Amount = P(1+r/n)^nt

⇒ 12,500(1+0.12/60)^300

⇒ 12500(60.12/60)^300

⇒ 12500(1.002)^300

⇒ 125001.821

⇒ $22,762.5

Interest = Amount - Principal

⇒ 22,762.5 - 12,500

⇒ $10,262.5

Monthly payment = 10,262.5 / 60 months

⇒ $171.045

step-by-step explanation: