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You purchased a refrigerator at Sears for $2,500 (no sales tax added),
and you decide to pay for it in 4 years. Sears' interest rate is 10%.
What is the monthly payment that you need to pay?
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Use the formula for the monthly payment for a loan
M =
where P is the loan amount; r = is the nominal interest rate per month;
n is the number of payments (same as the number of months in 4 years); M is the monthly paymemt.
In this problem P = $2500; r = ; n = 4*12 = 48.
Substitute these values into the formula and get for monthly payment
M = = $63.41 (rounded).
Thus, the monthly payment is $61.41. ANSWER
In total, you will have to repay 4*12*61.41 = 2,947.68 dollars in 4 years.
The difference $2,947.68 - $2,500 = $447.68 = $370,681.60 is the interest you pay for this loan.
Solved.