Find the amount of interest and the monthly payment for the loan. Purchase a living room set for $3,400 at 12% add-on interest for 4 years. (Round your monthly payment to the nearest cent.)
interest-$192.00
per month -$12.33 is this correct
To find the amount of interest and the monthly payment for the loan, we can use the formula for add-on interest.
First, we need to calculate the amount of interest. Add-on interest is calculated by multiplying the original principal amount by the interest rate. In this case, the principal amount is $3,400 and the interest rate is 12%.
Interest = Principal amount * Interest rate
= $3,400 * 0.12
= $408
So, the amount of interest for the loan is $408.
Next, we can calculate the monthly payment for the loan. The add-on interest is added to the principal and then divided by the number of months.
Total amount to be paid = Principal amount + Interest
= $3,400 + $408
= $3,808
Number of months = Number of years * 12
= 4 years * 12
= 48 months
Monthly payment = Total amount to be paid / Number of months
= $3,808 / 48
= $79.33 (rounded to the nearest cent)
Therefore, the correct monthly payment is $79.33. The figure of $12.33 you provided is not correct.
Please note that since the interest is calculated using the add-on method, the monthly payment does not decrease over time, even though the principal is being paid off.