Find the monthly payment for the loan. (Round your answer to the nearest cent.)
$400 loan for 12 months at 14%
i = .14/12 = .0116666...
n = 12
400 = payment (1 - 1.011666...^-12)/.01166..
I get payment = 35.91
(400 * 1.14)/12 = 38
To find the monthly payment for a loan, we can use the formula for the monthly payment on a fixed payment loan:
Monthly Payment = [Loan Amount x Monthly Interest Rate] / [1 - (1 + Monthly Interest Rate)^(-Number of Months)]
First, let's convert the annual interest rate to a monthly interest rate. Since there are 12 months in a year, we divide the annual interest rate by 12. In this case, the monthly interest rate would be 14% / 12 = 1.17%.
Next, we substitute the values into the formula:
Loan Amount = $400
Monthly Interest Rate = 1.17% or 0.0117 (decimal)
Number of Months = 12
Monthly Payment = [$400 x 0.0117] / [1 - (1 + 0.0117)^(-12)]
To simplify further, we can calculate the value inside the brackets first:
1 + 0.0117 = 1.0117
(-12) is the exponent since we're raising it to the power of -12
Now we can substitute this value into the formula:
Monthly Payment = [$400 x 0.0117] / [1 - (1.0117)^(-12)]
Now, let's calculate the monthly payment using a calculator or spreadsheet. The result will be the monthly payment for the loan.