a couple borrows borrows $1500 for 1 year at 7 3/4% and decides to repay the loan by making 12 equal monthly?

Question

this is on compound intrest

Answer 1

Principal amount: $1,500.00
Payment amount: $130.31
Interest rate: 7.750%
Interest compounding: Monthly
Total payments: $1,563.72
Total interest: $63.72

Answer 2

The Question is unfinished: what is actually to be found? Probably the monthly instalment, but different people here have made different guesses. What matters more, WIDELY different interpretations of the interest rate have been made.

trackstarr59 has found correctly the sum to be repaid -- but in a year's time, NOT by 12 instalments -- if interest is compounded monthly. That's why her 1620.47 is somewhat greater than 1500 plus the simple interest of 116.25, which is 7.75% of 1500, as in Corky R's answer. He goes on to work out the monthly instalment as 1616.25/12 = 134.69. But if they really repay the principal and interest by such instalments, then this is roughly equivalent to repaying the WHOLE LOT halfway through (after 6 months), which effectively DOUBLES the interest rate to over 15% (a standard if rather dishonest trick: the "flat rate" of r% means roughly 2r% APR)! If they repay by 12 instalments AND the interest rate is HONESTLY to be 7.75%, then the instalments need to be lower, roughly halfway between the 134.69 and the interest-free repayment of 1500/12 = 125 (approx. 130). For an exact calculation, equate the 1620.47 (assuming compound interest) to the value, in a year, of the stream of 12 equal instalments x, and work out x (summing the geo progression). So Red Ryders's answer -- Total interest = $63.72, and [monthly] Payment amount = $130.31 -- is about RIGHT (and possibly exactly right). They should be paying about a fiver of interest a month (on top of the 125 of principal repayment).

Answer 3

Sounds like a vehicle loan to me. At 1500 for one year should be around 175 to a little over 200. The thing is what can you aford to pay. example- a 10,000.00 vehicle loan for 5 years cost around 268 per/mo with total payment of over 16k. However if the purchaser can aford a payment of 500 to 600 per/mo it will take about 1 1/2 years to pay off the 10k loan with a total payment of around 12k a savings of 4k. So if you can afored to pay more than the payment your making now you come out a head with less interest and having the loan paid off sooner.Remember nothing in life is free and 7 3/4 is a fare loan rate right now. If the money was needed then you do the best you can. However if you really didn't need the loan you should't have borrowed it in the first place. You can if you like look to re-finance the loan with another lending institution after a few month and try to get a better rate. However I don't think rates are going to come down for a while. If you try to re-finenance to soon the new lender will most likely turn you down. Reason is they will look at the loan as high risk thinking you are re-financig because you can't meet the payment. STAY away from re-financing all you loans. It is very costly to add car payment credit card bills, school loans etc. then have to pay them off over the next 5 year or more. It may lower your monthly payments but you will be paying for things that most likely will be in the trash long before they are paid off. You could try talking a debt counseller they may help...Best of luck... P.S. Sorry for any miss spelling...The spell check isn't working on this program...

Answer 4

your intrest rate is HIGH--don't do it. Look for 6 1/2 - 6 3/4 percent.

1500 times the percent rate divided by 12 months

Answer 5

this could properly be a trick very own loan. counting on how this is pronounced you pays 12% annual %, which interprets to $a hundred and twenty the 1st year , then 12% on the unpaid stability the subsequent year etc for 5 years. If the indoors maximum loan has a prepayment penalty paying it early won't save you lots; likewise paying the entire factor in one million year could nevertheless value you extra effective than 12%. precisely how the indoors maximum loan is written will make sure how lots extra effective than 12% in entire activity you will surely pay.

Answer 6

Red Ryder's calculator must be broken. I get 116.25 in interest, for a total to be repaid of $1616.25, at a payment of $134.68/month for 12 months. And if this is a personal unsecured loan, that's not a bad rate..

Answer 7

P = 1500
t = 1
r = .0775
n = 12
A(t) = P(1 + (r/n))^nt
A(t) = 1500(1 + (.0775/12))^12
A(t) = 1620.47

ANSWER
$1620.47