The monthly payment is $ 1892.392
Solution:
The formula for compound interest, including principal sum, is:
[tex]A = p(1 + \frac{r}{n})^{nt}[/tex]
Where,
A = the future value of the investment
P = the principal investment amount
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per unit t
t = the time the money is invested or borrowed for
From given,
p = 12500
t = 5 years
[tex]r = 12 \% = \frac{12}{100} = 0.12[/tex]
n = 12 ( compounded mothly )
Substituting the values we get,
[tex]A = 12500( 1 + \frac{0.12}{12})^{ 12 \times 5}\\\\A = 12500 ( 1 + 0.01)^{60}\\\\A = 12500 \times 1.8166\\\\A = 22708.7087[/tex]
What will her monthly payment be?
[tex]Monthly\ payment = \frac{22708.7087}{12} = 1892.392[/tex]
Thus monthly payment is $ 1892.392
Her monthly payment will be $171.045
Step-by-step explanation:
Amount = P(1+r/n)^nt
⇒ 12,500(1+0.12/60)^300
⇒ 12500(60.12/60)^300
⇒ 12500(1.002)^300
⇒ 12500[tex]\times[/tex]1.821
⇒ $22,762.5
Interest = Amount - Principal
⇒ 22,762.5 - 12,500
⇒ $10,262.5
Monthly payment = 10,262.5 / 60 months
⇒ $171.045
