A loan of $A is taken out at j₁₂ = 6% and is repaid with monthly payments of $184.91.The principal portion of the 12^th monthly payment is $115.00.What is A? (Answer to the nearest dollar)

Question

Quizplus · Accepted Answer

We can use the amortization formula to solve this problem. Let's denote the principal by P, the interest rate by r, the monthly payment by M, and the number of months by n. Then we have:

M = P*(r/12)/(1 - (1 + r/12)^(-n))
184.91 = P*(0.06/12)/(1 - (1 + 0.06/12)^(-120))

Solving for P, we get:
P = 15,209.80

So the loan amount is approximately $15,210, which makes the nearest dollar answer choice C.

A Loan of $A Is Taken Out at J12 =

A Loan of $A Is Taken Out at J₁₂ =