john borrowed $500 on a 12 month installment plan at 8.5% interest. What is his monthly payment?
To use the compound interest formula our interest rate's compounding must
match the payment period, so I will use 8.5% per annum compounded monthly
i = .085/12 = .00708333.... (I stored that in my calculator's memory for accuracy)
n = 12
PV = 500
payment --- p
500 = p(1 - 1.00708333...^-12)/.00708333..
I get p = $43.61