Question

Warning: Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced.

Use the Estimation Rule for Short-Term Loans to estimate the monthly payment on a loan of $4500 borrowed over a two-year period. (Round your answer to the nearest cent.)

The monthly payment is at least...?

The rate wasnt given in the problem

Answer 1

Short term Loan Amount =$4500

Short term tenure= 2 years

Interest rate = 12%

Compound = Monthly

Pay back = Every Month

• Payment Every Month = $211.83

Total of 24 Payments = $5,083.94

Total Interest = $583.94

Payment Schedule

Initial Balance    Interest Principal Closing Balance   

1          $4,500.00 $45.00 $166.83           $4,333.17

2          $4,333.17        $43.33 $168.50           $4,164.67

3          $4,164.67        $41.65 $170.18           $3,994.49

4          $3,994.49        $39.94 $171.89           $3,822.60

5          $3,822.60        $38.23 $173.60           $3,649.00

6          $3,649.00        $36.49 $175.34           $3,473.66

7          $3,473.66        $34.74 $177.09           $3,296.56

8          $3,296.56        $32.97 $178.87           $3,117.70

9          $3,117.70        $31.18 $180.65           $2,937.04

10        $2,937.04        $29.37 $182.46           $2,754.58

11        $2,754.58        $27.55 $184.28           $2,570.30

12        $2,570.30        $25.70 $186.13           $2,384.17

Year #1 End

13        $2,384.17        $23.84 $187.99           $2,196.18

14        $2,196.18        $21.96 $189.87           $2,006.31

15        $2,006.31        $20.06 $191.77           $1,814.54

16        $1,814.54        $18.15 $193.69           $1,620.86

17        $1,620.86        $16.21 $195.62           $1,425.24

18        $1,425.24        $14.25 $197.58           $1,227.66

19        $1,227.66        $12.28 $199.55           $1,028.11

20        $1,028.11        $10.28 $201.55           $826.56

21        $826.56           $8.27   $203.57           $622.99

22        $622.99           $6.23   $205.60           $417.39

23        $417.39           $4.17   $207.66           $209.73

24        $209.73           $2.10   $209.73           $0.00

Year #2 End