Given:
Loan Amount: $72,000
Loan Terms: 5 years = 60 months = n (convert years to months)
Interest Rate: 5.5% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $1,375.28 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $1,375.28 * 60 = $82,516.80
Interest Cost = Total Cost – Loan Amount
Interest Cost = $82,516.80 – $72,000 = $10,516.80
Loan Amount: $72,000
Loan Terms: 5 years = 60 months = n (convert years to months)
Interest Rate: 5.5% =
5.5/100
= 0.055 = 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 =
72,000 *
0.055
/
12
/
1 – ( 1+ 0.055/12
) -60
Monthly Loan Payment = $1,375.28 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $1,375.28 * 60 = $82,516.80
Interest Cost = Total Cost – Loan Amount
Interest Cost = $82,516.80 – $72,000 = $10,516.80
