Search 82,064 tutors
FIND TUTORS
Ask a question
0 0

detail explanation

Tutors, please sign in to answer this question.

2 Answers

interest=principal*rate*time
i=prt
i=$4000*9%*4(48 months is 4 years)
i=$4000*.09*4
i=$360*4
i=$1440
add $4000 and $1440
$4000+$1440=$5440
you have to pay back $5440 in 48 equal payments
$5440/48=$113.33 per month
29*$113.33=$3286.57
$5440-$3286.57=$2153.43 is the payoff amount
notice that if you paid the loan off over 48 months that 48*$113.33=$5439.84-you still owe $0.16
47*$113.33=$5326.51
$5440-$5326.51=$113.49 (your last payment), $0.16 more !

 

Add-on interest is where simple (not compounded) interest is computed at the start and added to the loan amount. The payment amount then is determined by adding the loan plus the add-on interest and then dividing by the number of payments.
 
48 months = 4 years
4*9% = 36%
$4000*36%=$1440
$4000+$1440=$5440
 
monthly payment = $5440/48 =$113.33
 
29*$113.33 = $3286.57
 
Payoff amount = $5440-3286.57 = $2153.43