First, we need to calculate the total amount of interest paid over the two-year period:
Total interest = Principal x Rate x Time
Total interest = $1,250 x 0.14 x 2
Total interest = $350
So the total amount Richard needs to repay is:
Total amount = Principal + Total interest
Total amount = $1,250 + $350
Total amount = $1,600
Now we can calculate the equal payments using the add-on plan formula:
Equal payment = Total amount / Number of payments
Equal payment = $1,600 / 24
Equal payment = $66.67
Therefore, the answer is (a) $66.67.
Richard borrowed $1,250 for two years at 14% a year under an
add-on plan. He repaid the loan, including interest, in 24 equal
payments. How much was each payment?
a. $66.67
b. $78.13
c. $15.63
d. $12.66
1 answer