Question

If Jose secures a $4000 loan that he will pay back in three years with a monthly interest rate of 1%, what is his monthly payment?

Answer 1

what is the formula that i use?

Answer 2

\[\Large M = \frac{L*i}{1-(1+i)^{-n}}\]
M = monthly payment
L = amount loaned out
i = monthly interest rate
n = number of months (convert years to months)

So,

M = unknown for now
L = 4000
i = 0.01 (convert percent form to decimal form)
n = 36 (36 months = 3 years)