Answer:
The monthly loan payment is of $458.88.
Step-by-step explanation:
Compound interest:
The compound interest formula is given by:
[tex]A(t) = P(1 + \frac{r}{n})^{nt}[/tex]
Where A(t) is the amount of money after t years, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per year and t is the time in years for which the money is invested or borrowed.
Amount owed after 5 years:
Loan of 24000 means that [tex]P = 24000[/tex]
5 years means that [tex]t = 5[/tex]
Interest rate of 2.75% means that [tex]r = 0.0275[/tex]
Compounded monthly means that [tex]n = 12[/tex]
The amount is A(5). So
[tex]A(t) = P(1 + \frac{r}{n})^{nt}[/tex]
[tex]A(5) = 24000(1 + \frac{0.0275}{12})^{12*5}[/tex]
[tex]A(5) = 27533[/tex]
What is your monthly loan payment?
$27,533 in 5 years = 5*12 = 60 months. So
27533/60 = 458.88
The monthly loan payment is of $458.88.
