Nikki borrowed $500 at 9% interest for 12 months under a monthly
installment plan. She must pay $8.7453 per $100 each month for 12
months. How much is her monthly installment payment?
a. $524.72
b. $3.75
c. $37.50
d. $43.73
First, we need to calculate the total amount of interest Nikki will pay over the 12 months:
Total interest = $500 x 0.09 x 1 = $45
Next, we need to calculate the total amount of money Nikki will have to pay back:
Total amount = $500 + $45 = $545
Since Nikki has to pay $8.7453 per $100 each month, we can calculate her monthly installment payment as follows:
Monthly payment = $545 x 0.087453 = $47.55
Therefore, the answer is d. $43.73 is not the correct answer as it does not take into account the total amount that needs to be paid back (just the interest).
To calculate Nikki's monthly installment payment, we need to determine the total loan amount and then divide it by the number of months.
First, let's calculate the total loan amount:
Principal = $500
Next, let's calculate the interest amount:
Interest = Principal × Rate × Time
Rate = 9% = 0.09
Time = 12 months
Interest = $500 × 0.09 × 12 = $540
Total loan amount = Principal + Interest = $500 + $540 = $1040
Now, let's find out how much Nikki needs to pay per $100:
Payment per $100 = $8.7453
To calculate the monthly installment payment, divide the total loan amount by 100 and then multiply it by the payment per $100:
Monthly Installment Payment = (Total loan amount / 100) × Payment per $100
Monthly Installment Payment = ($1040 / 100) × $8.7453
Monthly Installment Payment = $10.40 × $8.7453
Monthly Installment Payment = $91.07
Therefore, Nikki's monthly installment payment is $91.07.
None of the given answer choices matches the calculated monthly installment payment.