What would be the monthly payment on an add-on loan from a credit union at 6% over 36 months for the principal of $3000?
A) $83.33
B) $88.33
C) $98.33
D) $103.33

Question

Quizplus · Accepted Answer

To calculate the monthly payment of a loan, we can use the formula:
M = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
where 
M = monthly payment
P = principal
r = interest rate per month (6% / 12 = 0.005)
n = number of months (36)

Therefore, 
M = 3000 * (0.005 * (1 + 0.005)^36) / ((1 + 0.005)^36 - 1) 
M = $98.33 (rounded to the nearest cent)

So, the best choice is C, with a monthly payment of $98.33.

What Would Be the Monthly Payment on an Add-On Loan