Question

Suppose you borrow $12,000, which you must pay back in 30 equal monthly payments, each of which includes a .8% interest charge on the unpaid balance.

a) How much will you need to pay each month?
b) How much money did the bank make on this deal?

Answer 1

I will assume the .8% is the monthly rate

let the payment be P
12000 = P(1 - 1.008^-30)/.008

a) solve for P , I got 451.51

b) what is 451.51(30) compared to 12000 ?