Tim Will Borrow $ 6200 \$6200 $6200 At 12.5 % 12.5\% 12.5% APR. He Will Pay It Back Over 2 Years.What Will His Monthly Payment Be? (Use The Table.)Monthly Payment Per $100:$[ \begin{array}{|c|c|c|c|} \hline \text{Years} & 11.5% \text{ APR} & 12.5%

by ADMIN 248 views

Understanding the Problem

Tim is planning to borrow $6200\$6200 at an annual percentage rate (APR) of 12.5%12.5\%. He intends to repay the loan over a period of 2 years. To determine his monthly payment, we need to use a table that provides the monthly payment per $100\$100 for different APRs and years.

The Table: Monthly Payment Per $100\$100

Years 11.5% APR 12.5% APR
1 9.34 10.02
2 8.93 9.73
3 8.59 9.46
4 8.31 9.23
5 8.08 9.03
6 7.89 8.86
7 7.73 8.72
8 7.61 8.61
9 7.51 8.52
10 7.43 8.45
11 7.36 8.39
12 7.30 8.34
13 7.25 8.30
14 7.21 8.27
15 7.18 8.25
16 7.15 8.23
17 7.13 8.22
18 7.11 8.21
19 7.10 8.20
20 7.09 8.19

Calculating the Monthly Payment

To calculate Tim's monthly payment, we need to find the monthly payment per $100\$100 for 2 years at a 12.5%12.5\% APR. From the table, we can see that the monthly payment per $100\$100 for 2 years at a 12.5%12.5\% APR is 9.739.73.

Step 1: Calculate the Total Amount

The total amount borrowed by Tim is $6200\$6200. To calculate the monthly payment, we need to divide the total amount by the number of payments. Since Tim will repay the loan over 2 years, the total number of payments will be 2×12=242 \times 12 = 24.

Step 2: Calculate the Monthly Payment

To calculate the monthly payment, we need to multiply the total amount by the monthly payment per $100\$100 and divide by 100100. The formula for this calculation is:

Monthly Payment = (Total Amount ×\times Monthly Payment per $100\$100) / 100100

Plugging in the values, we get:

Monthly Payment = (6200×9.736200 \times 9.73) / 100100

Monthly Payment = $605.24

Conclusion

In conclusion, Tim's monthly payment for a loan of $6200\$6200 at a 12.5%12.5\% APR over 2 years will be $605.24\$605.24. This calculation can be used as a guide to determine the monthly payment for other loans with similar terms.

Discussion

The table provided in the problem statement shows the monthly payment per $100\$100 for different APRs and years. This table can be used to calculate the monthly payment for loans with different terms. The calculation involves multiplying the total amount by the monthly payment per $100\$100 and dividing by 100100.

Example Use Cases

The calculation of monthly payments can be applied to various scenarios, such as:

  • Calculating the monthly payment for a car loan
  • Determining the monthly payment for a mortgage
  • Estimating the monthly payment for a personal loan

Limitations

The calculation of monthly payments assumes that the interest rate remains constant over the loan period. In reality, interest rates may fluctuate, affecting the monthly payment. Additionally, the calculation does not take into account any fees or charges associated with the loan.

Future Work

Q: What is the formula for calculating monthly payments?

A: The formula for calculating monthly payments is:

Monthly Payment = (Total Amount ×\times Monthly Payment per $100\$100) / 100100

Q: How do I determine the monthly payment per $100\$100?

A: The monthly payment per $100\$100 can be found in a table that provides the monthly payment per $100\$100 for different APRs and years. Alternatively, you can use a financial calculator or online tool to determine the monthly payment per $100\$100.

Q: What factors affect the monthly payment?

A: The following factors can affect the monthly payment:

  • Total amount borrowed
  • APR (annual percentage rate)
  • Number of payments
  • Interest rate changes
  • Fees and charges associated with the loan

Q: Can I use a financial calculator to calculate my monthly payment?

A: Yes, you can use a financial calculator or online tool to calculate your monthly payment. These tools can help you determine the monthly payment per $100\$100 and calculate the total monthly payment based on the total amount borrowed and the number of payments.

Q: How do I calculate the total amount borrowed?

A: The total amount borrowed is the initial amount borrowed, plus any interest accrued during the loan period. You can calculate the total amount borrowed by using a financial calculator or online tool.

Q: Can I change the APR or number of payments to affect the monthly payment?

A: Yes, you can change the APR or number of payments to affect the monthly payment. For example, if you increase the APR, the monthly payment will increase. Similarly, if you increase the number of payments, the monthly payment will decrease.

Q: What are some common mistakes to avoid when calculating monthly payments?

A: Some common mistakes to avoid when calculating monthly payments include:

  • Failing to account for interest rate changes
  • Failing to consider fees and charges associated with the loan
  • Using an incorrect APR or number of payments
  • Failing to calculate the total amount borrowed

Q: Can I use a spreadsheet to calculate my monthly payment?

A: Yes, you can use a spreadsheet to calculate your monthly payment. You can create a formula to calculate the monthly payment per $100\$100 and then multiply it by the total amount borrowed to determine the total monthly payment.

Q: How do I determine the total amount borrowed if I have a variable interest rate?

A: If you have a variable interest rate, you can use a financial calculator or online tool to determine the total amount borrowed. These tools can help you calculate the total amount borrowed based on the initial amount borrowed, the variable interest rate, and the number of payments.

Q: Can I use a loan calculator to calculate my monthly payment?

A: Yes, you can use a loan calculator to calculate your monthly payment. Loan calculators can help you determine the monthly payment per $100\$100 and calculate the total monthly payment based on the total amount borrowed and the number of payments.

Q: What are some benefits of using a financial calculator or online tool to calculate my monthly payment?

A: Some benefits of using a financial calculator or online tool to calculate your monthly payment include:

  • Accuracy: Financial calculators and online tools can provide accurate calculations of the monthly payment.
  • Convenience: Financial calculators and online tools can save you time and effort by automating the calculation process.
  • Flexibility: Financial calculators and online tools can help you experiment with different APRs and number of payments to determine the best option for your financial situation.

Q: Can I use a financial calculator or online tool to calculate my monthly payment for a mortgage?

A: Yes, you can use a financial calculator or online tool to calculate your monthly payment for a mortgage. These tools can help you determine the monthly payment per $100\$100 and calculate the total monthly payment based on the total amount borrowed and the number of payments.

Q: What are some common mistakes to avoid when using a financial calculator or online tool to calculate my monthly payment?

A: Some common mistakes to avoid when using a financial calculator or online tool to calculate your monthly payment include:

  • Failing to enter the correct APR or number of payments
  • Failing to account for fees and charges associated with the loan
  • Using an incorrect formula or calculation method
  • Failing to review and verify the results