Given:
Loan Amount: $32,000
Loan Terms: 84 months = n
Interest Rate: 8% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $498.76 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $498.76 * 84 = $41,895.84
Interest Cost = Total Cost – Loan Amount
Interest Cost = $41,895.84 – $32,000 = $9,895.84
Loan Amount: $32,000
Loan Terms: 84 months = n
Interest Rate: 8% =
8/100
= 0.08 = r (convert percent to a decimal)Monthly Loan Payment Formula:
Monthly Loan Payment =
Loan Amount *
r
/
12
/
1 – ( 1+ r/12
) -n
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
32,000 *
0.08
/
12
/
1 – ( 1+ 0.08/12
) -84
Monthly Loan Payment = $498.76 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $498.76 * 84 = $41,895.84
Interest Cost = Total Cost – Loan Amount
Interest Cost = $41,895.84 – $32,000 = $9,895.84
