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11 May, 05:41

Leh Inc. recently borrowed $275,000 from its bank at a simple interest rate of 9 percent. The loan is for nine months and, according to the loan agreement, the interest should be added to the amount borrowed and the total amount to be repaid in monthly installments. Each monthly payment toward the loan amounts to:

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  1. 11 May, 08:13
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    Monthly payment = $32,618.05

    Explanation:

    To arrive at the monthly installment, we would calculate the total interest due on the loan for nine months, add it to the principal and then divided the sum by 9 months

    The monthly installment

    = (Principal + total interest for 9 months) / number of months

    Interest for 9 months

    = 9% * 9/12 * 275,000

    = $18,562.5

    Monthly installment

    = (275,000 + $18,562.5) / 9

    =32,618.05 per month
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