Question

Susan took out a personal loan for $3,500 at an interest rate of 13% compounded monthly. She made arrangements to pay the loan off in 3 years. What will her monthly payment be?
a.
$99.34
b.
$105.32
c.
$117.93
d.
$156.60


Please select the best answer from the choices provided

A
B
C
D

Answer 1

C — $117.93

Work: monthly rate i = 0.13/12 = 0.01083333, n = 36.
Payment = P * i / (1 − (1 + i)^−n) = 3500(0.01083333) / (1 − (1.01083333)^−36) ≈ $117.93.