Solve the problem.
-How many monthly payments of $100 are necessary to pay off a $2500 loan if the add-on interest rate is 8%?

Question

Quizplus · Accepted Answer

The total interest on a $2500 loan at an 8% add-on rate is $2500 * 0.08 = $200. The total amount to be repaid is $2500 + $200 = $2700. Dividing this total by the monthly payment amount, $2700 / $100 = 27, but since you can't make a partial payment, it rounds up to 28 payments. However, the correct calculation for the number of payments should consider the total amount to be repaid divided by the monthly payment, without rounding in the calculation process, leading to an error in the explanation. The correct approach to find the number of payments directly wasn't applied, and the choices provided don't match the corrected explanation's outcome. The correct method involves calculating the total repayment amount including interest and dividing by the monthly payment amount. Given the error in the initial explanation, the correct answer should reflect the total amount to be repaid divided by the monthly payment size, but without the mistake in calculation steps or misinterpretation of the result.

Solve the Problem. -How Many Monthly Payments of $100 Are Necessary to Pay