Given:
Loan Amount: $16,500
Loan Terms: 6 years = 72 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 = $265.35 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $265.35 * 72 = $19,105.20
Interest Cost = Total Cost – Loan Amount
Interest Cost = $19,105.20 – $16,500 = $2,605.20
Loan Amount: $16,500
Loan Terms: 6 years = 72 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 =
16,500 *
0.0495
/
12
/
1 – ( 1+ 0.0495/12
) -72
Monthly Loan Payment = $265.35 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $265.35 * 72 = $19,105.20
Interest Cost = Total Cost – Loan Amount
Interest Cost = $19,105.20 – $16,500 = $2,605.20
