Calculate the monthly payment necessary to retire a 3-year simple-interest loan of $12,000 if the simple interest rate charged is 9%. Round your answer to the nearest cent.
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Find the total investment and the interest earned when $2,500 is invested at 5% compounded semiannually for 3 years.
To calculate the monthly payment necessary to retire a simple-interest loan, you can use the formula for the monthly payment of a simple-interest loan which is:
Monthly Payment = (Principal + (Principal * Interest Rate * Time)) / (Number of Payments)
Let's break down the given information:
Principal: $12,000
Interest Rate: 9%
Time: 3 years
Number of Payments: Since the question asks for the monthly payment, we need to convert the time from years to months. As there are 12 months in a year, the number of payments will be 3 * 12 = 36.
Now let's substitute these values into the formula:
Monthly Payment = (12000 + (12000 * 0.09 * 3)) / 36
First, calculate the interest amount: 12000 * 0.09 * 3 = 3240.
Monthly Payment = (12000 + 3240) / 36
Add the principal and interest amount: 12000 + 3240 = 15240.
Monthly Payment = 15240 / 36
Now divide the total amount by the number of payments: 15240 / 36 = 423.33.
Therefore, the monthly payment necessary to retire the loan is $423.33 (rounded to the nearest cent).