Eric borrowed $1,800 for 9 months at 13.5% simple interest under an
add-on plan. What was his monthly payment?
a. $15.63
b. $220.25
c. $187.50
d. $1,982.25
To find the monthly payment, first find the total interest paid:
Interest = Principal x Rate x Time = $1,800 x 0.135 x (9/12) = $182.25
Then, add the interest to the principal and divide by the number of payments:
Total amount to be paid = $1,800 + $182.25 = $1,982.25
Number of payments = 9 months = 9
Monthly payment = $1,982.25 รท 9 = $220.25
Therefore, the answer is b. $220.25.