Given:
Loan Amount: $22,000
Loan Terms: 5 years = 60 months = n (convert years to months)
Interest Rate: 7% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $435.63 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $435.63 * 60 = $26,137.80
Interest Cost = Total Cost – Loan Amount
Interest Cost = $26,137.80 – $22,000 = $4,137.80
Loan Amount: $22,000
Loan Terms: 5 years = 60 months = n (convert years to months)
Interest Rate: 7% =
7/100
= 0.07 = 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 =
22,000 *
0.07
/
12
/
1 – ( 1+ 0.07/12
) -60
Monthly Loan Payment = $435.63 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $435.63 * 60 = $26,137.80
Interest Cost = Total Cost – Loan Amount
Interest Cost = $26,137.80 – $22,000 = $4,137.80
