Question 14 of 15
93 % Complete
Carly gets a loan from bank for a new car. She borrows $5,000 and get a simply yearly interest for 8%. She pays it off in 3 years with 36 payments. What is her monthly payment?
A. $172.22
B. $206.20
C. $138.89
D. $105.56
A. $172.22
Explanation: This question can be solved by using the simple interest formula.
Simple interest = principal amount x rate x time
SI = 5,000 x .08 x 3
SI = 1,200
The total that Carly must pay back is,
5,000(original loan amount) + 1,200 (interest) = $6,200
The duration is 3 years, which is 36 years.
$6,200/36 = $172.22