Question 5 of 15
30 % Complete
Sam takes out a loan from the bank for 12,500 for a new car. The simple yearly interest on his loan is 15%. He plans to pay off the loan over 5 years, which is 60 month payments. What would Sam’s monthly payment be?
A. $156.25
B. $364.58
C. $276.98
D. 306.58
B. $364.58
Explanation: Simple interest = principal x rate x time
SI = 12,500 x .15 x 5
SI = 9375.00
The total amount that Sam must payback is: (original loan)12,500 + (interest)9375 = 21,875
Over the course of 60 months: 21,875/60 = 364.58