document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1170456>Question 1170456</A>: <I><SPAN STYLE=\"word-break: break-all;\"> You borrow $27,000 with a term of two years at an APR of 5%. Use the Estimation Rule for Short-Term Loans to estimate your monthly payment. (Round your answer to the nearest cent.) </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #851183 by </B><A HREF=/tutors/aboutme.mpl?userid=CPhill><B>CPhill(1987)</B></A><img src=\"/images/stars/stars-12.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=CPhill><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=CPhill><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=851183\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Let's break down the Estimation Rule for Short-Term Loans and apply it to this problem.\r<BR>\n" );
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document.write( "**Estimation Rule for Short-Term Loans:**\r<BR>\n" );
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document.write( "The estimation rule provides an approximate monthly payment for short-term loans. The formula is:\r<BR>\n" );
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document.write( "Monthly Payment ≈ (Total Loan + Total Interest) / Number of Months\r<BR>\n" );
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document.write( "**1. Calculate the Total Interest:**\r<BR>\n" );
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document.write( "* **Loan Amount (P):** $27,000<BR>\n" );
document.write( "* **Annual Percentage Rate (APR) (r):** 5% or 0.05<BR>\n" );
document.write( "* **Loan Term (t):** 2 years\r<BR>\n" );
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document.write( "Total Interest = P * r * t<BR>\n" );
document.write( "Total Interest = $27,000 * 0.05 * 2<BR>\n" );
document.write( "Total Interest = $2,700\r<BR>\n" );
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document.write( "**2. Calculate the Total Loan Amount:**\r<BR>\n" );
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document.write( "Total Loan Amount = Loan Amount + Total Interest<BR>\n" );
document.write( "Total Loan Amount = $27,000 + $2,700<BR>\n" );
document.write( "Total Loan Amount = $29,700\r<BR>\n" );
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document.write( "**3. Calculate the Number of Months:**\r<BR>\n" );
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document.write( "Number of Months = Loan Term (years) * 12<BR>\n" );
document.write( "Number of Months = 2 * 12<BR>\n" );
document.write( "Number of Months = 24\r<BR>\n" );
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document.write( "**4. Estimate the Monthly Payment:**\r<BR>\n" );
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document.write( "Monthly Payment ≈ Total Loan Amount / Number of Months<BR>\n" );
document.write( "Monthly Payment ≈ $29,700 / 24<BR>\n" );
document.write( "Monthly Payment ≈ $1237.50\r<BR>\n" );
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document.write( "**Therefore, the estimated monthly payment is $1237.50.**<BR>\n" );
document.write( " </SPAN>\n" );
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