Compute the monthly payments for an add-on interest loan of $850, with an annual interest rate of 15 percent and a term of 4 years. Round to the nearest cent as needed.

Question

chaise · Answer

Similar to your last question.

A=PiT
A=850*0.15*4
A= 510

The interest on the loan is 510, plus the original amount of 850.
850+510=1360.

There are 48 months in a year.

1360/48=$28.34cents

The monthly repayment is $28.34 cents.

kropot72 · Answer

"add-on interest loan" implies compound interest to me rather than simple interest.

chaise · Answer

I see. haha, in his last question I took the assumption that it was simple interest. :\

kropot72 · Answer

Assuming monthly compounding of the interest the amount to be paid over four years is:
$$850\times(1+(.15/12))^{48}=$1,543.05$$
Monthly payments = $1,543.05/48 = $32.15