Given:
Loan Amount: $16,000
Loan Terms: 5 years = 60 months = n (convert years to months)
Interest Rate: 4.95% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $301.57 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $301.57 * 60 = $18,094.20
Interest Cost = Total Cost – Loan Amount
Interest Cost = $18,094.20 – $16,000 = $2,094.20
Loan Amount: $16,000
Loan Terms: 5 years = 60 months = n (convert years to months)
Interest Rate: 4.95% =
4.95/100
= 0.0495 = 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 =
16,000 *
0.0495
/
12
/
1 – ( 1+ 0.0495/12
) -60
Monthly Loan Payment = $301.57 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $301.57 * 60 = $18,094.20
Interest Cost = Total Cost – Loan Amount
Interest Cost = $18,094.20 – $16,000 = $2,094.20
